EUR/USD 5M
The EUR/USD pair traded with a downward bias again and with low volatility on Tuesday. As we said earlier, the low volatility of the pair should not cause any surprise now. There are no macroeconomic reports now, news from the EU and the US - too. Yesterday there wasn't any single event that could attract the attention of traders. Thus, in a way, the pair continues to move down more by inertia. Nevertheless, several signals were formed during the past day. Let's see how you should have traded on Tuesday. Basically, as is often the case on days with low volatility, all signals formed around the same level. The first one - just perfect in terms of buying accuracy - was formed in the middle of the European session. The price bounced off the extremum level of 1.1772, but after its formation it managed to go up only 17 points. This was enough to set Stop Loss to breakeven, at which the long position was closed, since the price could not reach the nearest target. Therefore, the signal was formally false. Then the price returned to the level of 1.1772 and settled below it. However, this time the movement in the right direction did not continue. The pair spent several hours near the 1.1772 level and eventually settled above it. Not for long, but it was enough for traders to manually close the trade at a loss of about 13 points. All subsequent signals should not have been processed any more, since they were deliberately false. The loss on the second trade could have been avoided, since the price has reached the nearest target - the support level of 1.1758. Another thing is that this level was located only 14 points from the previous one. Therefore, it was not possible to get profit on this deal anyway. But the loss was avoided.
Overview of the EUR/USD pair. July 21. Is the trade conflict between the US and China on the verge of a new escalation?
Overview of the GBP/USD pair. July 21. The pound continues to fall down against the background of the fourth "wave" of the epidemic in the UK.
EUR/USD 1H
Another descending trend line has formed on the hourly timeframe for the EUR/USD pair, which remains relevant at the moment. Another conversation is that there have been several such trend lines lately, and all of them were canceled, and the downward movement continued. However, formally, there is a downward trend. The trend line is good in any case, as it will be possible to determine the possible end of the downward movement. So far, it continues. The US dollar is still very reluctant to rise in price, so we do not expect an increase in the downward movement at least until Thursday, when the ECB sums up the results of its next meeting. On Wednesday, we still recommend trading from important levels and lines. The nearest important levels at this time are 1.1704, 1.1772 and 1.1807, as well as the Senkou Span B (1.1832) and Kijun-sen (1.1808) 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. On Wednesday, the European Union and the United States again have absolutely empty news calendars, so trading will again have to use pure technique, and the nature of the movement may remain the same.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair did not gain or lose a single point during the last reporting week (July 6-12). However, the Commitment of Traders (COT) report clearly shows that professional traders continue to build up short positions in the European currency. Let's try to figure out what this means for the euro/dollar pair. A group of non-commercial traders opened 2,300 buy contracts (longs) and 14,000 sell contracts (shorts) during the reporting week. Thus, the net position of the major players has been decreasing for the third or fourth consecutive week. This time it was reduced by almost 12,000 contracts. Thus, the bullish sentiment of traders continues to weaken. However, we would like to remind you that, globally, the upward trend is maintained for the euro/dollar pair, and at this time, a correctional movement is just taking place. Also remember the global fundamental factor, which is the fact that trillions of dollars are being injected into the American economy. It still continues to inflate the US money supply. Therefore, we may again face a paradoxical picture, when the demand for the euro is falling, but the single currency itself is rising. This effect can be achieved if the demand for the dollar falls at a faster rate or the supply of the dollar grows faster. However, it is precisely the latter that has been happening all the time over the past year and a half. We have repeatedly cited data on the money supply in the United States and concluded that for the M1 aggregate it has grown several times over the past year and a half. Thus, formally, the chances of a further decline in the euro have been growing for a month, according to COT reports. And in fact, the upward trend in the EUR/USD pair can resume at any time.
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.
