EUR/USD 5M
The EUR/USD pair was trading quite calmly again during the third trading day of the week, but it did not stand still. Although the volatility, of course, again left much to be desired. However, despite the fact that the pair passed only 55 points from the low to the high of the day, there were still some good movements that could and should be worked out. Let's try to understand yesterday's deals. The first sell deal should have been opened at the very beginning of the European trading session, as the price rebounded from the extreme level of 1.2243. After that, the pair went down more than 40 points and reached the support level of 1.2200 and the extreme level of 1.2190. It was possible to take profit near any level. The least that could be earned on this transaction is 38 points. Further from the level of 1.2190, there was also a very accurate rebound, which was a buy signal. It was already necessary to open long positions here. After that, the pair went up again 40 points, but did not reach the level of 1.2243. But in any case, this trade should have set the Stop Loss to breakeven, so even if this trade was not closed manually at the end of the trading day, traders wouldn't get a loss on it in any case. But we usually recommend that you do not transfer trades to the next day and instead you should only trade within the day. Therefore, the deal should be closed in a profit of about 20 points towards the end of the day. So you could earn at least 58 points on Wednesday, which is an excellent result, given that the pair only passed 55 points (volatility). Also, a report on inflation in the European Union was published during the past day. However, let me remind you that this was a re-assessment for April, which also did not differ from the first one. 1.6% in annual terms. But core inflation, on the contrary, fell to 0.7%, which is disappointing. However, these data did not have any impact on the euro/dollar pair. The moment when this report was published is marked with the number "1" in the chart. As you can see, if the market reaction can be attributed to this report, then it would be no more than 25 points.
EUR/USD 1H
The upward trend is clearly visible on the hourly timeframe. Yesterday, The pair corrected to the level of 1.2190, bounced off it, so we believe that the upward movement can continue. The main thing is that there is a trend line that does not cause any doubts. In general, there are also no questions about the foundation. We have repeatedly said that the dollar remains at the mercy of global technical and fundamental factors that have nothing to do with the macroeconomic background. Today, we still recommend trading from the important levels and lines that are marked on the hourly timeframe. The nearest important levels at this time are 1.2175, 1.2190 and 1.2243, as well as the Senkou Span B(1.2082) and Kijun-sen(1.2151) lines. The lines of the Ichimoku indicator can move throughout the day, which should be taken into account when searching for trading signals. Signals can be rebounds or breakthroughs of these levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price moves 15-20 points in the right direction. This will protect you against possible losses if the signal turns out to be false. European Central Bank President Christine Lagarde is set to speak in the European Union on Thursday. However, Lagarde has not mentioned anything important recently, so there is little hope that this time everything will be different. Meanwhile, a report on the number of applications for unemployment benefits in May will be published in the United States. However, this report is not significant at this time, so it is unlikely to be followed by any reaction from traders, except, perhaps, maybe a tiny bit.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair increased by 60 points during the last reporting week (May 4-10). Thus, the European currency continues to be in high positions and may renew its 2.5-year highs in the coming weeks. Professional traders, who have started to reduce Buy-contracts (longs) since last September, have started to increase them again in the last few weeks. Recall that the Commitment of Traders (COT) reports, firstly, do not take into account the amount of money poured into the economy (any), and secondly, they do not reflect the demand for the dollar. Thus, in recent months, COT reports do not always reflect the real picture of what is happening in the foreign exchange market. Recall that large players can sell off the euro, but if the Federal Reserve pours trillions of US dollars, the euro will still rise in price, and the COT reports will show that the demand for the euro is falling. However, recently, the group of non-commercial traders seems to have rethought some things and will now follow the trend itself, the tone of which is set by the Fed. Commercial traders opened 17,000 new buy contracts and 5,500 sell contracts during the reporting week. Thus, the net position grew by 11,500 at once, which is quite a lot. The first indicator in the chart above shows the divergence of the lines showing the net positions of commercial and non-commercial traders, so at this time we can conclude that the upward trend has resumed. The second indicator also shows that the "non-commercial" group has begun to increase buy contracts on the European currency.
Explanations for the chart:
Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.
Support and resistance areas are areas from which the price has repeatedly rebounded off.
Yellow lines are trend lines, trend channels and any other technical patterns.
Indicator 1 on the COT charts is the size of the net position of each category of traders.
Indicator 2 on the COT charts is the size of the net position for the non-commercial group.
