Analysis of the EUR/USD 5M chart.
During the second trading day of the week, the EUR/USD currency pair steadily increased. Traders were only interested in one report throughout the previous day: the change in the number of job openings in the United States. This measure belongs to a category of labor market characterization indicators. Remember that the most recent nonfarm payroll numbers were strong; all other data is secondary. Yesterday, however, the vacancy report came in substantially lower than anticipated, resulting in another dollar decline. The decline of the US dollar would have continued regardless of the report. There were no significant statistics on Monday, but the euro continued to rise. The pair has surpassed two ascending trend lines and continues to advance. Thus, only one-way traffic is unaffected by macroeconomic or fundamental factors.
Tuesday featured numerous trading signals. First, the price rebounded twice from the 1.0930 level and nearly reached the key line. But I failed. Thus, traders were required to establish a stop-loss at breakeven, the point at which the deal was expected to conclude. Then, near the same level of 1.0930, a buy signal appeared, and by the end of the trading day, the pair had gained 30 points. Hence, traders could earn a small profit.
The COT Report:
A new COT report for March 28 was released on Friday. The CFTC has made up for lost time and is currently publishing reports for the present period. The picture has been a perfect reflection of market conditions in recent months. The graph above shows that the second indicator, "net position of important players," went up after September 2022. At approximately the same time, the growth of the European currency began. Currently, the net position of non-commercial traders is "bullish" and stays extremely high, as does the position of the European currency, which cannot adjust downwards properly. We have already warned traders that a relatively large "net position" number enables us to allow the upward trend to stop shortly. The first indicator, which displays a condition that frequently precedes the end of a trend with the red and green lines very far apart, demonstrates this. The European currency attempted to begin a decline, but thus far, all that has happened is a sluggish pullback. Over the previous reporting week, the number of buy-contracts in the "non-commercial" group increased by 7,100, while the number of shorts increased by 6,900. Thus, the net position has not altered significantly. The number of buy contracts for non-commercial traders is 145 thousand, greater than that of sell contracts. Even without COT reports, it is evident that the pair will resume its decline because a correction is still in the works.
On the hourly time frame, the pair resumed its northward movement, disregarded all the sell signals it had generated, and continued growing without justification. Such inertial motion can continue for as long as desired. It is evident to any trader that the euro is rising excessively quickly and violently, contrary to the news flow. Hence, all that remains is to watch what is happening. We designate the following price levels for trade on Wednesday: 1.0581, 1.0658-1.0669, 1.0762, 1.0806, 1.0868, 1.0926, 1.1033, 1.1137-1.1185, 1.1234, 1.1274, and the Senkou Span B (1.0820) and Kijun-sen (1.0884) lines. The Ichimoku indicator's lines might fluctuate during the day, which should be considered when establishing trade signals. Also, supplementary support and resistance levels exist, but no signals form near them. Signals can "bounce" and "surpass" high levels and lines. Do not forget to place a stop-loss order at breakeven if the price moves 15 points in the desired direction. This protects against potential losses should the signal prove to be false. On April 5, the European Union and the United States will report business activity indices. This information is the same quality as that collected on Monday and Tuesday. Officially, there are still grounds for new purchases of the euro and sales of the dollar. However, these indices would cause a maximum movement of 20 to 30 points under normal market conditions.
Explanations of the illustrations:
The price levels of support and resistance (resistance and support) are depicted as thick red lines, close to which the price movement is likely to halt. They are not trading signal sources.
Kijun-sen and Senkou Span B are the lines of the Ichimoku indicator that have been shifted from the 4-hour to the hourly timeframe. Have robust lines.
Extreme levels are thin red lines from which prices have previously rebounded. These are trading signal providers.
Yellow lines represent trend lines, trend channels, and other technical patterns.
The first indicator on the COT charts is the net position size of each trading category.
On the COT charts, indicator 2 represents the net position size for the "non-commercial" group.
