EUR/USD 5M
The EUR/USD pair started an upward movement on Wednesday. Perhaps this is due to tomorrow's European Central Bank meeting, since this week there has not been a single macroeconomic report or other fundamental event, either in the United States or in the European Union. And so traders were forced to exclusively pay attention to the technique again. We have already said in our fundamental articles that we expect the European currency to grow back to the 22nd level, and perhaps even higher, since we do not see any special prospects for the dollar. Perhaps this growth has begun. The only question is, what impact will the ECB meeting have on the emerging upward trend? It is possible that traders will be disappointed and the downward movement will resume. However, this will come later. Let's take a look at yesterday's trades for now. All signals during the day formed around one extreme level at 1.1772. The signals were not the most accurate, but nevertheless it was possible to work on them. The first sell signal was formed at the very beginning of the European session, as the price settled below the level of 1.1772. This signal cannot be called strong; nevertheless, the nearest support level was worked out. It was not possible to make money on this signal, since the levels are too close to each other. The next buy signal was blatantly false, since after its formation the quotes could not continue to move up, and then it moved along the level of 1.1772 for a long time. Therefore, traders could get a loss of about 10 points on a long position. The next and last buy signal was already strong enough and allowed traders to make a profit. The price settled above the level of 1.1772, and eventually reached the critical line. Thus, you could get a profit of 18 points on a long position. Not much, but the volatility of the EUR/USD pair left much to be desired - about 50 points.
Overview of the EUR/USD pair. July 22. ECB meeting: moment of truth for the euro and the dollar.
Overview of the GBP/USD pair. July 22. Brits continue to be infected and dying from the coronavirus. The fourth "wave" is in full swing.
EUR/USD 1H
The downward trend continues to be relevant on the hourly timeframe for the EUR/USD pair, supported by the downward trend line. At the moment, the quotes have come close to this line. Another rebound from it can provoke the resumption of the downward movement. A breakthrough will confirm the change in the trend to an upward one, which is what we are waiting for. On Thursday, we still recommend trading from important levels and lines. The closest important levels at this time are 1.1704, 1.1756 and 1.1881, as well as the Senkou Span B (1.1832) and Kijun-sen (1.1800) lines. The Ichimoku indicator lines can move 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. The European Union will sum up the results of the ECB meeting on Thursday. We could receive any kind of reaction to this as we have already mentioned in fundamental articles (we recommend that you familiarize yourself). Although in many ways it will depend on what ECB President Christine Lagarde says at the press conference. In any case, this event is very important and you should pay attention to it.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair did not gain or lose a single point during the last reporting week (July 6-12). However, the Commitment of Traders (COT) report clearly shows that professional traders continue to build up short positions in the European currency. Let's try to figure out what this means for the euro/dollar pair. A group of non-commercial traders opened 2,300 buy contracts (longs) and 14,000 sell contracts (shorts) during the reporting week. Thus, the net position of the major players has been decreasing for the third or fourth consecutive week. This time it was reduced by almost 12,000 contracts. Thus, the bullish sentiment of traders continues to weaken. However, we would like to remind you that, globally, the upward trend is maintained for the euro/dollar pair, and at this time, a correctional movement is just taking place. Also remember the global fundamental factor, which is the fact that trillions of dollars are being injected into the American economy. It still continues to inflate the US money supply. Therefore, we may again face a paradoxical picture, when the demand for the euro is falling, but the single currency itself is rising. This effect can be achieved if the demand for the dollar falls at a faster rate or the supply of the dollar grows faster. However, it is precisely the latter that has been happening all the time over the past year and a half. We have repeatedly cited data on the money supply in the United States and concluded that for the M1 aggregate it has grown several times over the past year and a half. Thus, formally, the chances of a further decline in the euro have been growing for a month, according to COT reports. And in fact, the upward trend in the EUR/USD pair can resume at any time.
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.
