EUR/USD 5M
The EUR/USD pair was trading very weakly again on Tuesday. The volatility of the day did not exceed 40 points, so there was still no reason to count on scattered trading signals. A few days ago we said that a flat is dangerous because the price can be near one level or line for a rather long period of time, while forming a huge number of false signals. This is exactly how it was yesterday, when the pair was spinning around the extremum level of 1.1744 for the entire day. It should also be noted that there was not a single event or report during the day in either the US or the European Union, so it is not at all surprising that the pair spent another day in ultra-calm trading. Now let's take a look at the trading signals and how you should have traded on Tuesday. The first sell signal was formed within two hours at the beginning of the European trading session. In the end, the quotes rebounded from the level of 1.1744 and managed to decline by 11 points. Subsequently, already at the US trading session, that is, after 7 hours the pair went up the same 11 points and returned to the level of 1.1744, and also overcame it, where it was necessary to close short positions at a loss of about 10 points. Further, all subsequent signals could be safely ignored, since it was already clear that the pair was trading in a 40-point range all day without even an intraday trend. The movement, of course, slightly strengthened in the afternoon, but 20 points up can hardly be called a movement that should have been worked out. Recall that the least you could Take Profit for the EUR/USD pair is 30 points.
Overview of the EUR/USD pair. 25 August. The Fed got scared of the coronavirus and changed their minds to wind up QE
Overview of the GBP/USD pair. 25 August. The dollar retreated, but Jerome Powell could restore market confidence in the Fed's willingness to roll back QE
EUR/USD 1H
It is also clearly seen that the upward movement continues on the hourly timeframe, however, since the pair has been moving with low volatility for a couple of months, it seems that trading is going on as usual. The trend at this time is characterized as an upward trend, and the price has overcome the Kijun-sen and Senkou Span B lines, therefore, the prospects for further growth of the euro/dollar pair are significantly improving. Recall that we have been waiting for the upward trend to resume for several months, but every time something hinders the bulls. At this time, the pair has the opportunity to start moving up, since most of the technical and fundamental factors support the euro, but what is the point if the bulls are buying very weakly, and the volatility is 40-50 points a day? On Wednesday, we continue to recommend considering trading from important levels and lines. The nearest important levels at this time are 1.1704, 1.1750, 1.1805, 1.1852, as well as the Senkou Span B (1.1735) and Kijun-sen (1.1706) lines. The Ichimoku indicator lines can change their position 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. One might say that it will be completely calm in terms of news in both America and the European Union on August 25. Vice President of the European Central Bank Luis de Guindos will deliver a speech in the EU, but the probability that he will report something important does not exceed 10 percent. the last time the markets reacted to this report.
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 40 points during the last reporting week (August 10-16). Since the European currency has generally been falling in recent weeks, it is not surprising that the Commitment of Traders (COT) report showed that the bullish sentiment has weakened among professional traders. This is clearly seen on the first indicator, which has been showing a weakening of bullish sentiment since February. The green and red lines are narrowing, indicating the end of the upward trend. However, the upward trend itself cannot be considered complete yet, and the latest COT report allowed the green line (the net position of the "non-commercial" group of traders) to start increasing. This means that the bullish mood among the major players is strengthening again, so it is possible that a new upward trend will start in the near future. The second indicator also signals an increase in the net position. It clearly shows that the volume has grown, and accordingly the likelihood of a new appreciation of the euro is increasing. Professional traders opened 21,600 buy contracts (longs) and closed 4,400 sell contracts (shorts) during the reporting week. Thus, the net position grew by 26,000 at once, which is a lot even for the euro currency. However, as we can see, in the next few days the euro resumed its decline, so the new COT report may already show a decrease in the net position. In any case, as the bullish sentiment persists, as the total number of open contracts for buying from non-commercial exceeds the total number of contracts for selling. Therefore, we continue to expect the upward trend to resume.
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.
