EUR/USD 5M

The EUR/USD pair failed to show growth again on Monday. It just continued to fall even though there were no fundamental or macroeconomic events either in the United States or in the European Union. The euro began to fall at night, that is, we can assume that it was a continuation of Friday's fall in the truest sense of the word. As a result, Monday for the euro/dollar ended around the 7th level. Recall that the low for the last five years is the 1.0636 level. And the euro is confidently moving in its direction. What can we say about the foundation or macroeconomics now? Only that they do not change for either the euro or the dollar. And the factors that have pulled down the pair so low may continue to influence the market for a very long time. Two key factors are the geopolitical conflict in Eastern Europe and the difference in approaches to monetary policy between the European Central Bank and the Federal Reserve.

As for trading signals, there were few of them on Monday. The first one – for short positions – was formed when the 1.0761 level was surpassed. Afterwards, a strong fall began. Strong, but not lasting. The price dropped below the level of 1.0729, but literally an hour later it went back above this level, which served as a buy signal. Short positions should be closed at a profit of about 20 points and longs opened. But long positions did not bring any profit, as the pair failed to reach even the nearest target level of 1.0761 and returned to 1.0729. However, the Stop Loss set at breakeven made it possible to avoid losses. A new buy signal near the level of 1.0729 and new longs that closed near the level of 1.0761 this time, near which a sell signal was formed (error of 2 points). A sell signal near the 1.0761 level brought 30 points of profit, and the deal should have been closed manually later in the evening. As a result, not a single unprofitable transaction for the day.

COT report:

The latest Commitment of Traders (COT) reports on the euro raised more questions than they provided answers! Major players, starting from January 2022, maintain a bullish mood. And the euro, starting from January 2022, maintains a downward trend. During the reporting week, the number of long positions decreased by 600, and the number of shorts from the "non-commercial" group increased by 7,000. Thus, the net position decreased by 6,000 contracts. This means that the bullish mood has weakened a bit. However, it still remains bullish, since the number of long positions now exceeds the number of short positions with non-commercial traders by 32,000. Accordingly, the paradox lies in the fact that professional players generally buy euros more than they sell, but the euro continues to fall almost non-stop, which is clearly seen in the chart above. We have already explained earlier that this effect is achieved by a higher demand for the US dollar. The demand for the dollar is higher than the demand for the euro, which is why the dollar is rising against the euro. There is such an effect "due" to the geopolitical conflict in Ukraine. Therefore, the data of COT reports on the euro now do not give an opportunity to predict the further movement of the pair. The longer the phase of active hostilities in Ukraine persists, the higher the probability of a collision between the European Union and the food and energy crisis, and the dollar will continue to grow due to its status as a "reserve" currency.

We recommend to familiarize yourself with:

Overview of the EUR/USD pair. April 26. The confusion of opinions within the ECB did not allow the euro to grow.

Overview of the GBP/USD pair. April 26. The problems of central banks are now almost the same. Only the states of the economies differ.

Forecast and trading signals for GBP/USD on April 26. Detailed analysis of the movement of the pair and trading transactions.

EUR/USD 1H

The hourly timeframe shows that the pair continues its downward movement and is getting closer and closer to its 5-year lows. We believe that the euro can only count on a technical correction now, since all other factors speak in favor of a further drop in quotes. And in the near future, it is unlikely that anything will change in fundamental or macroeconomic terms. The euro has almost unlimited potential to fall. We allocate the following levels for trading on Tuesday – 1.0637, 1.0729, 1.0761, 1.0806, 1.0924 (supporting level), 1.0938, as well as the Senkou Span B (1.0845) and Kijun-sen (1.0816) lines. The lines of the Ichimoku indicator can move during the day, which should be taken into account when determining trading signals. There are also secondary support and resistance levels, but no signals are formed near them. Signals can be "bounces" and "breakthrough" levels - extremes and lines. Do not forget about placing a Stop Loss order at breakeven if the price went in the right direction of 15 points. This will protect you against possible losses if the signal turns out to be false. There are no important events or publications scheduled for April 26 in the European Union. There is only a secondary report on orders for durable goods in America. We will again expect the beginning of an upward correction.

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.