EUR/USD 5M
The volatility for the EUR/USD pair was negligible for the third trading day of the week. The pair went from a minimum to a maximum of about 30 points throughout the day before the announcement of the results of the Federal Reserve meeting. Of course, when the Fed announced its decisions and new forecasts for key macroeconomic indicators, the markets began to trade much more actively. But even this activity was not at its highest. From the point of the beginning of the movement, the quotes went 30 points up and 70 points down. The very same results of the meeting openly disappointed traders. The Fed has not announced the start of the QE program, but said that the program will likely be completed by the middle of next year. It also became known that the forecast for GDP for 2021 has been reduced from 7% to 5.9%. In addition, the "dot-plot" chart showed that eight members of the Fed's monetary committee expect a rate hike next year (at the last meeting there were seven of them). Thus, this meeting may well be called a "walk-through" and certainly not in favor of the US dollar. Nevertheless, the dollar went up in price, but very modestly. The situation may change by morning. Now for the trading signals. No signal generated for the entire day. Not surprising at a volatility of 30 points. After the results were published and Fed Chairman Jerome Powell's speech began, three trading signals were generated at once. Moreover, the price just ideally bounced first from the level of 1.1704, then from the level of 1.1750, and then overcame the level of 1.1704. However, all these signals were formed during an important fundamental event and the movement could be absolutely anything. It was impossible to predict it. Therefore, traders, of course, could work out these signals, but it was extremely difficult to react to them in time.
Overview of the GBP/USD pair. September 23. Boris Johnson: UK-US trade deal is unlikely to be signed before 2024.
EUR/USD 1H
You see on the hourly timeframe that the euro/dollar pair is still continuing its downward movement, which is currently supported by a downward trend line. It cannot be said that the Fed meeting changed anything. At least the technical picture has not changed at all. The price bounced off the Kijun-sen line and dropped to the first support level at 1.1684. Thus, while the dollar continues to strengthen. On Thursday, we continue to draw the attention of traders to important levels and lines - 1.1612, 1.1666, 1.1704, 1.1750, 1.1805, as well as the Senkou Span B (1.1817) and Kijun-sen (1 , 1745). 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. Trading will be calmer on September 23, but along with calmness, outright despondency may return to the markets. Simply put, volatility may fall back to its lowest levels. And it is extremely difficult to trade with volatility of 30-40 points. Nevertheless, relatively important reports on business activity in the service and manufacturing sectors of the United States and the European Union will be published today. If these indicators change significantly from the previous month, then a slight market reaction can be expected.
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 60 points during the last reporting week (September 7-13). The latest Commitment of Traders (COT) report showed minimal changes in the mood of the "non-commercial" group of traders, which, we recall, is the most important group of traders. During the reporting week, professional traders closed 4,000 contracts for buying (longs) and also the same number for selling (shorts). Thus, the net position has not changed, as well as the mood of the major players. But serious changes followed in the "commercial" group, where traders immediately closed 27,000 buy contracts (longs) and 36,000 sell contracts (shorts). These data are less important, but still the difference is striking. Returning to commercial traders, the total number of buy contracts (longs) they now have is 187.5 thousand, and sell contracts at 160 thousand. Thus, the bullish mood still persists, but it has significantly weakened in recent months. Therefore, we can say that the euro/dollar pair is currently teetering on the edge of an abyss called a "new downward trend". In principle, we have already said that the critical point for maintaining the long-term upward trend, which began in March 2020, is the level of 1.1700. If the bears manage to overcome it after a 9-month ordeal, then the chances of further strengthening of the US currency will increase sharply. Therefore, this issue may be resolved in the coming days. On the other hand, much will depend on the actions of the Fed not only at the next meeting, but also in the near future. If the markets do not find evidence of readiness to curtail QE, then the US dollar will lose its trump card in the confrontation with the euro currency.
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.
