EUR/USD 5M
The EUR/USD pair was trading quite actively again on Wednesday, although there weren't any important macroeconomic reports during the day. It should be noted right away that, in principle, the latest forecasts of the European Commission and the Federal Reserve minutes can be classified as important events. However, for example, the European Commission announced updated forecasts for GDP and inflation for 2021-2022 in the morning, and the European currency did not grow during the day. Thus, the fact that the European Commission raised forecasts for economic growth has not been worked out by the markets anyway. The pair's quotes began to fall in the US session, that is, the dollar strengthened. However, the Fed minutes was scheduled for late evening, that is, again, a discrepancy. Although, of course, theoretically, traders could buy the dollar due to expectations of new information from the Fed, which it has not yet announced. Indeed, at the last meeting the phrase "we are going to start discussing the possible curtailment of the program of stimulating the economy" sounded, after which the US currency rose by 250 points. The day before yesterday there were no important publications, but volatility was even stronger, and the US dollar also rose in price, although on Tuesday there was not a single reason for this at all. As for trading signals, only two of them were formed on Wednesday, and both at a time when the pair had already passed most of the way down. It is terribly disappointing that at the very beginning of the US trading session the price did not reach the extreme level of 1.1837 by only a point, thus traders were deprived of a strong sell signal. And the next one was formed only when the quote surpassed 1.1800. It should have been worked out, but after its formation, the downward movement did not continue, and the price almost immediately returned back to this level. As a result, it was necessary to manually close the short position with the minimum profit at any convenient moment.
Overview of the EUR/USD pair. July 8. The European Union is preparing for the fourth "wave" of the pandemic. The European Commission increases GDP forecasts.
Review of the GBP/USD pair. July 8. The Bank of England and the UK authorities continue to "put on a good face on a bad game."
EUR/USD 1H
You can clearly see the downward trend on the hourly timeframe, however, it is still impossible to form a trend line or channel. Thus, we can continue to observe how the US dollar is gradually growing, but at the same time, we can only rely on levels and lines. However, we continue to expect the EUR/USD pair to drop to the 1.1700 level or so. We talked about the reasons for this scenario in our fundamental articles, we recommend that you read the articles above. On Thursday, we still recommend trading from important levels and lines. The nearest important levels at this time are 1.1704, 1.1800, 1.1837, 1.1922, as well as the Senkou Span B (1.1906) and Kijun-sen (1.1838) 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 publish a report from the last meeting of the European Central Bank, and the United States will release a report on applications for unemployment benefits. If a reaction were to follow these events, then it will be absolutely minimal.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair rose by 10 points during the last reporting week (June 22-28). The changes were minimal. There were serious changes (both in the COT report and in the price plan) a week earlier, when the pair fell by 250 points, and big players closed a large number of buy contracts (longs). According to the latest Commitment of Traders (COT) report, professional traders closed about 500 buy contracts and opened 3.6 thousand sell contracts (shorts) during the reporting week. This means that the net position for the non-commercial group of traders dropped 4,000 at once, which is quite a bit. Therefore, major players remain bullish, but the sentiment continues to weaken. You can see this in both indicators in the chart above. On the first indicator, the green line (net position of the non-commercial group) continues to approach the red line (net position of the commercial group), which means the end of the current upward trend. Maybe it is the global trend that will not end, but at this time a new downward trend segment of the trend is clearly visible (recall that on the 24-hour timeframe this segment may be the second, corrective with a target of 1.1700). The second indicator shows that the net position of non-commercial traders have decreased. The same thing: since this indicator is declining, this means that the chances for the euro's growth are also falling at this time. However, in general, we recall that the total number of Buy-positions for large players is now 210,000, and Sell-positions - 124,000. That is, the market sentiment is still bullish. Plus, do not forget about the fact that the Federal Reserve and the Congress are injecting huge amounts into the US economy, as well as the fact that inflation is high in America.
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.
