EUR/USD 5M
The EUR/USD pair was very volatile on Thursday. Not surprising, since the results of the European Central Bank meeting were announced on that day, which the markets had been waiting for from the very beginning of the week. It was the ECB meeting that was expected, because there was nothing more to wait for this week. In our groundbreaking articles, we have detailed what ECB President Christine Lagarde and the ECB said after the meeting. Here we just point out that the central bank's rhetoric remained "ultra-soft". Therefore, in principle, it is even logical that the pair ultimately fell to the previous day's lows. However, at the same time, we still look forward to a new upward trend that will become part of a global upward trend that has been going on for more than a year and a half. Now let's see how the pair should have been traded on Thursday. In principle, the pair continued to move very sluggishly before the results were announced. Therefore, it was still difficult to trade. The entire trading signal was formed in the first half of the day, both in the form of a price rebound from the critical line. Both turned out to be false, as the price failed to reach the nearest target - the level of 1.1758. True, traders could only open one deal on these signals, since the second signal simply duplicated the first one. Before the very beginning of the announcement of the results, it was necessary to manually close the short position. The profit was 0 points. Then the storm began. The pair passed a total of almost 200 points in different directions within a few hours, simultaneously reaching all important lines and levels. However, it is obvious that it was not worth opening deals based on these signals, since the reaction of the markets could be absolutely unpredictable and strong. The numbers "1" and "2" mark the points when the results were announced and Lagarde's press conference began. Only the penultimate and last signals are noteworthy. By that time, it was already possible to assume that the markets had come out of the state of the storm. The price fell short of reaching the Senkou Span B line by just a point, but it could still be considered a rebound. Traders had the right to open short positions around this line. Subsequently, the Kijun-sen line was crossed, and the short position had to be manually closed in the late afternoon. We managed to get a profit of about 30-40 points on it.
Overview of the EUR/USD pair. July 23. Christine Lagarde's rhetoric and the ECB's sentiment remained ultra-soft.
Overview of the GBP/USD pair. July 23. The fourth "wave" of the pandemic in Great Britain continues unabated. A new political crisis is brewing in the country.
EUR/USD 1H
The pair's downward trend was canceled on the hourly timeframe for the EUR/USD pair, as the price broke through the trend line during the day. Formally, the pair remains in a downward trend, but we are still waiting for the upward trend reversal. In principle, if you wait for the price to settle above the trend line, then it will be more confident to talk about the formation of an upward trend. On Friday, we still recommend trading from important levels and lines. The nearest important levels at this time are 1.1704, 1.1756 and 1.1881, as well as the Senkou Span B (1.1822) 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 US and the European Union will publish data on business activity in the services and manufacturing sectors on Friday. We believe the markets will ignore such reports, however, if the actual value is very different from the forecast, a slight 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 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.
