EUR/USD 5M
The EUR/USD pair continued to fall on Tuesday. Over the past few days, the euro has already fallen in price by 280 points. The volatility is very high, and the decline continues even without attempts to correct. Yesterday the pair fell to its 5-year lows located near the level of 1.0637. Surpassing this level will open the way to lows for the last 25 years, near the 1.0340 level. Thus, the European currency easily and simply continues to fall. What about macroeconomics and foundation? Absolutely nothing! Not a single important report published either in the United States or in the European Union on Tuesday. We do not classify the report on orders for durable goods as important, and, as practice has shown, there really was no reaction to it. We do not know why the euro continues to fall this week. In general, the euro's decline is not surprising, since most of the factors remain on the dollar's side. However, why did such a strong drop suddenly begin? Most likely, this is a banal coincidence. The bears got down to business again, as they realized that there are no bulls in the market now.
There were few trading signals on Tuesday, only one. But what! At the very beginning of the European trading session, the pair rebounded from the level of 1.0729, after which it fell by 65 points. It did not cross any other level or line while it was moving towards the 1.0637 level. And the price did not reach the 1.0637 level by some 7 points. Thus, the short position had to be closed manually. Profit - at least 60 points.
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 27. Olaf Scholz is unhappy in Germany. The Chancellor may resign.
Overview of the GBP/USD pair. April 27. Finland and Sweden already have one foot in NATO. Moscow threatens. New geopolitical conflict in the Baltics?
Forecast and trading signals for GBP/USD on April 27. Detailed analysis of the movement of the pair and trading transactions.
EUR/USD 1H
We can see that the pair continues its downward movement on the hourly timeframe and has come close to its 5-year lows. We believe that now the euro can only count on a technical correction, since all other factors speak in favor of a further fall. However, even a technical correction cannot begin! And this despite the fact that there are no local factors supporting the fall now. Event calendars were completely empty on Monday and Tuesday! We highlight the following levels for trading on Wednesday - 1.0340-1.0369, 1.0637, 1.0729, 1.0761, 1.0806, as well as Senkou Span B (1.0845) and Kijun-sen (1 .0787). Ichimoku indicator lines 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 "rebounds" and "breakthrough" extreme levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price has gone in the right direction for 15 points. This will protect you against possible losses if the signal turns out to be false. The speech of European Central Bank President President Christine Lagarde is scheduled in the European Union on April 27 and nothing more. Nothing else in America. Now everyone is waiting for Lagarde to confirm the words of de Guindos about her readiness to raise the key rate in July. If she confirms it then the euro may stop falling against the dollar.
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.
