Analysis of EUR/USD 5M

On Monday, the EUR/USD saw stagnation as volatility remained sharply lower. The range from the day's low to its high was about 30 pips, which generally means a lack of movement. We can say the same thing just by looking at the chart above – the pair stayed near the 1.0806 level all day. Not a single economic report, not one significant fundamental event. Joachim Nagel's speech did not provide any new information nor evoke any market response. It's as if Monday simply didn't exist.

It makes no sense to highlight Monday's trading signals as there were simply no movements. Nevertheless, the pair bounced off the 1.0806 level thrice, and the maximum distance it managed to move in the right direction was just 7 pips. So even if traders had opened a long position, it could be closed anywhere since the pair stood still all day. It's hard to even say if this trade resulted in a profit or loss.

COT report:

On Friday, a new COT report for August 22 was released. Over the last 11 months, COT reports fully corresponded to what is happening in the market. The chart above clearly shows that the net position of major traders (the second indicator) began to grow in September 2022 and at about the same time the euro started rising too. In the last 6-7 months, the net position has not risen but the euro remains at very high levels. At the moment, the net position of non-commercial traders is bullish and remains strong. The euro keeps climbing against the US dollar (in the long term).

I have already mentioned the fact that a fairly high value of the net position signals the end of an uptrend. This is also confirmed by the first indicator where the red and green lines are very far from each other. Usually, it precedes the end of the trend. During the last reporting week, the number of long positions of the non-commercial group of traders increased by 6,900 and the number of short ones rose by 8,000. The net position decreased by 1,100 contracts, which is not significant. The number of long positions is higher than the number of short ones of non-commercial traders by 160,000. This is a very large gap as the difference is almost threefold. Even without COT reports, it is obvious that the euro should decline but speculators are still in no hurry to sell.

Analysis of EUR/USD 1H

On the 1H chart, the pair is trying to correct higher, but it has no solid grounds for significant growth. This week we expect a lot of important reports, so to a large extent, the pair's movement will depend on their nature. The pair can freely extend its decline or start a correction, but we continue to look in one direction - downward. Even if the euro manages to correct higher, after it ends, we expect it to fall further.

On August 29, traders should pay attention to the following key levels: 1.0658-1.0669, 1.0762, 1.0806, 1.0868, 1.0935, 1.1043, 1.1092, 1.1137, as well as the Senkou Span B (1.0906) and Kijun-sen (1.0821). The lines of the Ichimoku indicator can move during the day, which should be taken into account when determining trading signals. There are support and resistance levels that can be used to lock in profits. Traders look for signals at rebounds and breakouts. It is recommended to set the Stop Loss orders at the breakeven level when the price moves in the right direction by 15 pips. This will protect against possible losses if the signal turns out to be false.

Today, the only economic report worth mentioning is the JOLTs job openings report in the US. It's an important and interesting report that concerns the state of the labor market. However, its actual value must deviate from the forecast for us to see a market reaction. If this does not happen, we should brace ourselves for another low-volatility day.

Description of the chart:

Support and resistance levels are thick red lines near which the trend may end. They do not provide trading signals;

The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, plotted to the 1H timeframe from the 4H one. They provide trading signals;

Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals;

Yellow lines are trend lines, trend channels, and any other technical patterns;

Indicator 1 on the COT charts is the net position size for each category of traders;

Indicator 2 on the COT charts is the net position size for the Non-commercial group.