EUR/USD 5M
Yesterday, the EUR/USD pair was also trading last Thursday and last Friday. Volatility significantly increased on Monday, and the price showed a rather strong trend during the day. And this is despite the fact that there weren't any important macroeconomic reports planned for the first trading day of the week, and Friday reports from overseas should have fueled the US dollar to rise, that is, a fall in the euro/dollar pair. But we believe that it is high time to forget about a strong Nonfarm report and low unemployment. These reports did not impress market participants and, from our point of view, there is only one explanation for this. The trend changes to an upward one. And we have warned traders about this for a long time. We said that the downward movement in the first three months of 2021 looks like a normal correction, just in the long term. The euro has been growing for a long time, so the correction took three months. However, the factor of infusion of huge sums of money into the US economy cannot be ignored. Thus, it is quite possible that the next round of the dollar's decline is starting now, since there are more dollars in the foreign exchange market than the euro or the pound. As for trading on Monday, there was a flat at night, as usual, and then in the European session it was determined with what it had to do near the critical Kijun-sen line. The price overcame it several times, failing to form a clear rebound or breakthrough. Therefore, positions should not have been opened here. But closer to the US trading session, the markets made a decision, and the bulls were active, which led to forming a strong and stable intraday upward trend. The Kijun-sen line was crossed again, and the price also settled above the horizontal channel, in which it was trading in in the morning. Therefore, long positions should have been opened. The nearest target was the 1.1805 level. By taking profits around this level, traders could have made around 44 points of profit. As for macroeconomic reports, the US ISM Service Index was published when the quote hit the 1.1805 level, which turned out to be much better than forecasts, but did not cause any reaction from traders. The pair slipped after 20 minutes, which can hardly be attributed to the ISM index.
EUR/USD 1H
On the hourly timeframe, we see that the EUR/USD pair has settled above the downward trend line and it was also possible to open long positions based on this signal, as the trend changed to an upward one. At this moment the longs should have already been opened on the 5-minute timeframe, so we can say that both timeframes gave the same signals today. Now it is more convenient to trade up. We expect the euro to continue rising. In general, we still recommend trading from important levels and lines that are plotted on the hourly timeframe. The nearest important levels are 1.1805 and 1.1836, as well as the Senkou Span B line (1.1825). Signals can be rebounds and once levels and lines are surpassed. 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. The only report we have for today is the unemployment rate in the European Union for February, which the markets will ignore with almost a 100% probability. Moreover, as Monday showed, buyers have become more active and they are not too interested in the macroeconomic background at this time.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
Recall that the EUR/USD pair fell by 170 points during the last reporting week (March 23-29). This is already quite a significant drop and we have been recording it for several consecutive weeks. The new Commitment of Traders (COT) report was quite eloquent. A group of non-commercial traders opened 25,000 contracts for shorts and 34 contracts for longs during the reporting week. This means that the net position has decreased by another 25,000, and the bullish mood of the major players continues to weaken. At the moment, the total number of Buy-contracts (longs) that professional players opened is at 195,500, and Sell-contracts (shorts) at 136,000. Although as early as January 5, 2021, that is, three months ago, the numbers were as follows: 226,000 - 82,000. That is, in the three months of the new year, non-commercial traders have increased more than 50,000 contracts for the sale and closed about 30,0000 contracts for the purchase. As the trend changed into a downward trend. According to COT reports, we expected the trend to end last September. The chart clearly shows why. The red and green lines of the first indicator moved away from each other as much as possible in September 2020, which were the harbingers of a trend reversal. However, the dollar's depreciation due to the exorbitant trillions of dollars that was poured into the American economy caused a new rise in the euro, which is again clearly seen in the chart. The net position of non-commercial traders (the second indicator) has been falling since the same September-2020, while the euro's quotes continued to grow at the same time, and these two facts contradict each other. Thus, both the technique in global terms and the COT report are now in favor of continuing the downward movement. The key level is 1.1691.
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.
