EUR/USD 5M
The EUR/USD pair "exploded" on April 19 both literally and figuratively. The pair started to sharply grow in the morning, which remained for most of the day. Active trading was observed even during the Asian session. Thus, the market sluggishness from last week evaporated over the weekend, and the US dollar slumped again. We have already mentioned the reasons (more precisely, the cause) why the dollar is depreciating and at the moment nothing has changed at all. Trillions of dollars that are poured into the American economy cannot go unnoticed for the exchange rate of the national currency. Thus, neither "macroeconomics" nor a new "foundation" was even necessary for the dollar to resume falling. Now let's see what signals were formed during the day and whether it was possible to make money on such a strong movement. At first glance, you can and should have made money. But in practice, not everything is so simple. The first signal of the day was formed during the Asian session - surpassing the extremum level of 1.1951. However, we do not recommend working out night signals, they rarely bring profit. But this time the strong upward movement began at night, so this signal was correct. Nevertheless, the next signal should have been worked out - surpassing the extremum level of 1.1988. But it wasn't pleasing. The fact is that the pair did not clearly surpass this level from the very first bar. It stomped around it for around 15 minutes, afterwards it settled just 20 points above this level. And so traders had to open a long position at the 1.2007 level. Take note that the price went up 20 points in just five minutes. But we still managed to earn 34 points on such a strong movement, since the next nearest level at 1.2042 was also reached. Afterwards, a rebound occurred from it, which should be interpreted as a signal to sell. At the time of this writing, this deal remains open.
EUR/USD 1H
The upward movement looks impressive on the hourly timeframe. We clearly see that the upward trend persists and is supported by two uptrend lines. In addition, we previously mentioned that everything is going according to plan, that it would rise even further. Thus, the only thing that was unexpected was the strength of the upward movement, since we did not receive any macroeconomic report and important fundamental events did not take place either. And once again, no important event or report from the European Union and the United States on Tuesday. However, as we can see, traders do not need reports to continue pushing the pair to the upside, according to the global upward trend. We still recommend trading from important levels and lines that are indicated on the hourly timeframe. The nearest important levels are 1.1988, 1.2042 and 1.2108, as well as the Kijun-sen line (1.1963). Pullbacks and breakouts of these levels and lines can serve as signals. 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 your trades against possible losses if the signal turns out to be false.
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 increased by 100 points during the last reporting week (April 6-12). Notably, professional traders have been actively reducing buy contracts (longs) and increasing sell contracts (shorts) for the past six weeks. The total number of buy contracts from the non-commercial group of traders remains twice as large as the number of sell contracts. This indicates bullish sentiment among non-commercial traders although it has been less strong in recent weeks. The new COT report showed minimal changes. During the reporting week, major players opened 2,200 buy contracts and closed 2,200 sell contracts. Thus, the net position slightly increased by 4,400. That is, the mood of the major players became more bullish. We said earlier that the Commitment of Traders (COT) report data suggested the end of the upward trend back in September 2020. However, from that moment, the upward trend continued, and it may resume now. This is happening due to the flood of liquidity into the US economy. So, what exactly do COT reports display? They reflect the actions of major players of the foreign exchange market, in particular, those players who make the majority of transactions on Forex. However, COT reports do not take into account such a factor as the inflation of the money supply. Here is a paradox: large players sell off the European currency, but it will still rise in price in the end, since the amount of US dollars in the economy and markets is growing. The logic behind it is as follows: the supply grows and the price falls. Therefore, during this year of pandemic, COT reports do not always accurately reflect the actual market situation. However, they clearly show how the sentiment of professional players is changing.
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.
