EUR/USD 5M
The EUR/USD pair rose by about 40 points during the first trading day of the week, but volatility remained rather weak, which has been the scourge of the currency pair over the past weeks. This pair's behavior is not too surprising, since there is often less volatility on Mondays, especially now when 3 out of 5 trading days end with volatility of no more than 50 points. Plus, there was no major event or macroeconomic reports on Monday, so the markets had nothing to react to anyway. We believe that the pair is at the beginning of a new upward trend, but the obvious weakness of the movement can make adjustments to this strategy. Now let's see what signals were generated during the day and how you should trade. All trading signals formed near the critical line and they were all false. Unfortunately, this also happens. The first buy signal was not worked out for a long time, as the price settled below the critical line almost immediately. As a result, traders could have received a 13 point loss on a long position. When the price settled below the Kijun-sen line, short positions should have been opened. The price went down 16 points in total after the formation of a sell signal, which was enough to set the Stop Loss level to breakeven, at which the deal was eventually closed. Further, all subsequent signals near the critical line should not have been processed anymore, since at that moment two false signals had already formed near this line.
Overview of the EUR/USD pair. July 27. Preview of the week. Will Jerome Powell rock the markets again?
Overview of the GBP/USD pair. July 27. Britain is emerging from the fourth wave of the epidemic, but is facing a new mutation.
EUR/USD 1H
The downward trend reversed for the EUR/USD pair on the hourly timeframe, as the price settled above the downward trend line. However, at the moment the price has not managed to overcome the important and strong Senkou Span B line, around which the trading ended on Monday. We have already said many times that we are waiting for a new round of the upward movement, but the pair's movements themselves remain rather weak. Much of this week will depend on the results of the Federal Reserve meeting. On Tuesday, 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 (1.1818) and Kijun-sen (1.1791) 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 not have a single major event or report on Tuesday, and the US will publish a report on orders for durable goods, which was due to be published on Monday, but was postponed to Tuesday, as well as an indicator of consumer confidence. We believe that these reports will be ignored by the market or provoke minimal reaction.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair fell by 60 points during the last reporting week (July 13-19). In recent weeks, major players have continued to reduce the number of Buy contracts (longs) and increase sell contracts (shorts). This is clearly seen in the first indicator. The green line (net position of the "non-commercial" group) continues to decline, while the red line (net position of the "commercial" group) continues to grow. Recall that when these two lines move towards each other, it means that the current trend is coming to an end or has already ended. However, we have already repeatedly drawn your attention to the fact that the global injection of cash into the US economy continues, as the Federal Reserve has repeatedly stated. Thus, a rather paradoxical situation turns out: professional traders are selling the euro, but at the same time it is getting very weak and has excellent chances of resuming the upward trend. This is because the money supply in the United States continues to increase and the dollar is now also depreciating due to high inflation and high supply in the foreign exchange market. It turns out to be a situation in which the euro is getting cheaper mostly due to the fact that players are selling it, and the dollar is getting cheaper because of the actions of the Fed and the US government. Consequently, as a result, that currency falls, the rate of reduction in price of which is higher. So far, this is the euro currency. But its decline is very weak. During the reporting week, non-commercial traders opened another 7,000 contracts to sell and closed 5,600 contracts to buy. Thus, their net position decreased by another 12.6 thousand contracts, and the mood became even less bullish. The total number of buy contracts from the non-commercial group is already 210 thousand, and for sale - 162 thousand. More recently, the gap was twofold.
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.
