EUR/USD 5M
The EUR/USD pair was trading very weakly again on Wednesday. The volatility of the day again did not exceed 40 points, so there was still no reason to count on scattered strong trading signals. The movement only slightly increased in the evening. But one could fully rely on scattered signals, since in a flat the pair either does not form any signals at all, or else forms them in batches, "finding" some level and starting to jump around it. This is exactly what happened on Wednesday, and even with two levels at once. It should be noted that in a certain scenario, even a horizontal channel could form, between the boundaries of which one could trade. However, the lines and levels that traders had at their disposal did not have such an effect. It should also be noted right away that a report on orders for durable goods was published in the US yesterday, which turned out to be slightly better than forecasted, but still negative, -0.1% m/m. The time when this report was published is marked with a "1" in the chart. As you can see, no reaction followed, unless, of course, the 10-point movement is considered a reaction. Now let's look at how you should have traded on Wednesday. The first signal was formed near the Senkou Span B line. The price bounced off this line quite clearly, which allowed traders to open long positions. Subsequently, the price even broke the closest level of 1.1750, going up 16 points in total, which was enough to set the Stop Loss level to breakeven. However, then the quotes of the pair returned below the level of 1.1750, and the long position was closed in zero profit. Then traders could open short positions at the third sell signal (consolidation below 1.1750), however, this deal should have been left right before the beginning of the US session, since the publication of the report mentioned above was planned. Thus, we managed to get a couple of points of profit on this deal. All subsequent signals should be ignored, since by that time it had already become clear that the pair was trading flat again, and enough false signals had already formed near the Senkou Span B line and the level of 1.1750.
Overview of the EUR/USD pair. 26 August. Robert Kaplan, Coronavirus and Jackson Hole
Overview of the GBP/USD pair. 26 August. Brexit aftermath: McDonald's ran out of milkshakes
EUR/USD 1H
The hourly timeframe also clearly shows that the upward movement retains its prospects, or, better to say, until it is canceled. However, in the past few days, the pair has been stuck tightly in one place. Thus, for now, we are talking about a local flat. We still expect a new uptrend to form, but the pair continues to show "unreal" volatility of 40-50 points a day. At this rate, any trend will take a couple of years to form. Thus, the main thing now is to wait for the end of the flat and low volatility movement. On Thursday, we continue to recommend considering trading from important levels and lines. The closest important levels at this time are 1.1666, 1.1704, 1.1750, 1.1805, 1.1852, as well as the Senkou Span B (1.1735) and Kijun-sen (1.1715) lines. The Ichimoku indicator lines can change their position 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. There will be no report or events in the United States and the European Union that could really affect the course of trading on August 26. GDP for the second quarter in the second estimate will be published in America, as well as a report on claims for unemployment benefits. Both of these reports are likely to be ignored or cause the market to react by 10-20 pips. In the European Union, there will be nothing interesting at all during the day.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair increased by 40 points during the last reporting week (August 10-16). Since the European currency has generally been falling in recent weeks, it is not surprising that the Commitment of Traders (COT) report showed that the bullish sentiment has weakened among professional traders. This is clearly seen on the first indicator, which has been showing a weakening of bullish sentiment since February. The green and red lines are narrowing, indicating the end of the upward trend. However, the upward trend itself cannot be considered complete yet, and the latest COT report allowed the green line (the net position of the "non-commercial" group of traders) to start increasing. This means that the bullish mood among the major players is strengthening again, so it is possible that a new upward trend will start in the near future. The second indicator also signals an increase in the net position. It clearly shows that the volume has grown, and accordingly the likelihood of a new appreciation of the euro is increasing. Professional traders opened 21,600 buy contracts (longs) and closed 4,400 sell contracts (shorts) during the reporting week. Thus, the net position grew by 26,000 at once, which is a lot even for the euro currency. However, as we can see, in the next few days the euro resumed its decline, so the new COT report may already show a decrease in the net position. In any case, as the bullish sentiment persists, as the total number of open contracts for buying from non-commercial exceeds the total number of contracts for selling. Therefore, we continue to expect the upward trend to resume.
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.
