EUR/USD 5M
The EUR/USD pair showed enviable volatility and very good movements during the last trading day of the week. The pair performed only one global reversal during the day. And the fewer reversals within the day, the more convenient it is to trade. The signals were not the most accurate, nevertheless, they could be worked out. Before we begin to analyze trading signals and transactions, I would like to immediately note that the next package of macroeconomic reports from overseas did not arouse any interest among traders. The number "1" in the chart indicates the time when all the most important reports of the day were published. As you can see, sharp reversals did not occur at this time. The pair turned up much later, about half an hour after the data was published. Now let's start analyzing the trading transactions. Traders completely missed the first movement of the day - down 60 points. The first signal was formed when the US trading session opened – the pair went beyond the extreme level of 1.2160. However, there was no need to rush to open deals for selling here, because just below the Senkou Span B line, from which a rebound could be made. Therefore, it was necessary to wait for a breakthrough of the Senkou Span B line here. However, this foresight did not play into the hands of traders. A breakthrough of the Senkou Span B line took place, and it was necessary to open short positions here, but the downward movement did not continue, so the signal turned out to be false and brought a loss of 12 points. But almost immediately a buy signal was formed, as the price settled above the Senkou Span B line, but there was also no need to rush with long positions, because now it was necessary to wait for the level of 1.2160 to be overcome. This breakthrough took place and at about 1.2165 it was possible to open long positions with the Kijun-sen line as the goal. As we can see now, the price did not reach the critical line, so the long position should have been manually closed on Friday evening, since we do not recommend moving positions to the next day. Thus, it was possible to earn about 34 points on this transaction. The total profit of the day was 22 points.
Overview of the EUR/USD pair. May 31. The US budget assumes an increase in spending. Why is it dangerous for the dollar?
Overview of the GBP/USD pair. May 31. They continue to talk about inflation in Britain and are preparing for a rate hike in 2022.
EUR/USD 1H
The technical picture was even more confusing on the hourly timeframe on Friday. We previously identified the current movement as a flat, but at the same time noted that the nature of the movement itself is not too similar to a flat. The pair was just trading in a very limited range. It managed to leave this range on Friday, a break through of the long-term upward trend line and return back to the range. Thus, formally, the upward trend is broken, and the flat seems to be preserved, but still does not look like a flat. In general, the movements are as complex and unpredictable as possible. Although it is quite possible to work with them on a 5-minute timeframe. On Monday, we still recommend trading from the important levels and lines that are marked on the hourly timeframe. The nearest important levels at this time are 1.2160, 1.2243 and 1.2267, as well as the Senkou Span B (1.2147) and Kijun-sen (1.2198) lines. The lines of the Ichimoku indicator can move throughout the day, which should be taken into account when searching 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 15-20 points in the right direction. This will protect you against possible losses if the signal turns out to be false. No major events or important reports scheduled for Monday in the European Union and the United States. Therefore, volatility may decrease tomorrow, and the price may frequently change direction 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 rose by 60 points during the last reporting week (May 18-24). The new Commitment of Traders (COT) reports, which was released yesterday, showed that professional traders continue to increase their buying positions in the European currency. This time, they opened 3,800 new Buy contracts (longs) and closed 1,400 Sell contracts (shorts). Thus, the net position for this group of traders increased by 5,200. Not much, but also not a little. And so, the bullish mood of market participants becomes stronger again, which increases the euro's prospects for succeeding growth in 2021. The green and red lines (net positions of commercial and non-commercial traders) of the first indicator continue to move away from each other, which indicates the strengthening of the current trend (in our case, the upward trend). Therefore, at this time, the COT report clearly signals a more preferable continuation of the euro's growth. In general, professional traders have opened 240 thousand contracts for buying and 133 thousand for selling. And so there is almost twice a difference. But we continue to believe that the main factor is not the actions of professional players, but the actions of the Federal Reserve and the US Congress. The chart above clearly shows that at a certain point, the first indicator began to signal the end of the upward trend, that is, large players began to reduce longs and move to shorts. However, this did not lead to a reversal of the global trend downwards, which indicates other, more significant factors affecting the exchange rate of the European currency.
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.
