EUR/USD 5M
The EUR/USD pair traded quite well on Wednesday, given the fact that the price was moving in one direction for almost the entire day. However, there are several nuances here. Firstly, despite such one-way traffic, quite a lot of signals were generated during the day, not all of which should have been worked out. Secondly, one should clearly understand why the pair went up today. Perhaps it was just a round of upward movement, not based on anything. Perhaps this move was triggered by the US inflation report from the day before yesterday. As we have already said, rising inflation is a negative factor for the currency, but nevertheless, the US dollar showed growth the day before yesterday. In general, one way or another, but the EUR/USD pair was in an upward movement yesterday. Let's now see how you should have traded. The first signal - to buy - was formed at the opening of the European session - surpassing the extremum level of 1.1784. Here it was possible to open long positions, but the upward movement did not immediately continue. The price returned to the 1.1784 level three times and bounced off it thrice as well. Unfortunately, traders could interpret the last third rebound as a sell signal, since the price has gone far enough below this level. And so, it was a long position that was closed at a loss of 12 points, short positions were opened instead, and they also closed at a loss, as the price almost immediately returned to the area above the level of 1.1784 (another 17 points loss). The beginning of the day turned out to be very bad. As a result, the last signal had to be interpreted as a false breakout of the level of 1.1784, so it was necessary to open long positions again. After that, a one-way movement was already observed, within which the price rose to the critical line and immediately overcame it. Thus, a long position brought traders at least 36 points of profit, and given the immediate breaking of the Kijun-sen line, the deal could have been held further and manually closed, which would have brought even more profit. Thus, Wednesday ended up with a small profit.
Overview of the EUR/USD pair. July 15. Will Jerome Powell's opinion on QE change?
EUR/USD 1H
The euro-dollar pair began to jump from side to side on the hourly timeframe, while maintaining a downward trend, which is currently not supported by either the trend line or the channel. Thus, the situation is not very favorable. One could clearly see that the price often changes the direction of movement and is practically in the same price range. The pair managed to decline by only 175 points for almost a month now, although formally the downward trend continues. From our point of view, traders are preparing for new powerful purchases of the euro. On Thursday, we still recommend trading from important levels and lines. The closest important levels at this time are 1.1772, 1.1807, 1.1881, 1.1922, as well as the Senkou Span B (1.1863) and Kijun-sen (1.1830) lines. The Ichimoku indicator lines can move during the day, which should be taken into account when looking 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 points in the right direction. This will protect you against possible losses if the signal turns out to be false. There are no major events or publications scheduled in the European Union on Thursday. Federal Reserve Chairman Jerome Powell will speak at the US Congress in the evening. However, this will be the second time in Congress in two days, just before a different committee. Thus, the text of the Fed's report is unlikely to change. And all the most interesting information will become known in the next few hours. The United States will also publish a report on claims for unemployment benefits, but we believe that there will be no reaction to it.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair fell by 100 points during the last reporting week (June 29-July 5). Thus, one could expect to see a new weakening of the bullish sentiment of professional players in the Commitment of Traders (COT) report. This is exactly what we saw in the latest report that was released on Friday. The number of buy contracts (longs) for the reporting week increased by 4,000, and the number of sell contracts (shorts) - by 16.5 thousand. Thus, the net position of the "non-commercial" group of traders decreased by 12.5 thousand. Therefore, at the moment we can say that market participants continue to get rid of long positions and build up shorts. Therefore, it is possible to predict a further fall in the European currency. But not everything is so simple. We have already said that the movements of the pair over the past few months look just like a correction against the global upward trend. In addition, the US government and the Fed continue to inject hundreds of billions of dollars into the US economy, inflating the money supply and stimulating inflation. Therefore, big players can get rid of euro positions, but at the same time the dollar supply in the markets will grow, which may lead to the opposite effect. A situation may arise in which the net position of professional players on the euro will decline, while the euro currency will grow. Actually, in October-November-December 2020, this is exactly what happened. The green line of the first indicator (net position of the non-commercial group) was decreasing, while the euro was growing. Thus, we recommend that traders pay more attention to technical analysis.
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.
