EUR/USD 5M
The EUR/USD pair tried to correct on Thursday, and then tried to resume the downward trend. It turned out badly in both cases. As part of the correction, the price managed to reach the level of 1.0019, so the total correction against the 470-point drop is 130 points. Do I need to say that this is very little? Also, the price tested the strength of the descending trend line yesterday, and it held! Therefore, the downward trend continues, and the pair may resume its fall in the near future. We have repeatedly said that the main factors that pushed the pair down in the last six months remain unchanged. There is nothing to add here. The United States just published a report on GDP for the second quarter, which turned out to be slightly better than expected. But at the same time, GDP still shrank by 0.6%, so now we can say for sure that the American economy has been falling for two consecutive quarters, not growing. However, this moment does not have any negative impact on the US dollar.
Everything in regards to the trading signals on Thursday were difficult, as the movement was not great. First, a sell signal was formed near the critical line. Afterwards, the price could not go down even 15 points. And a short position was closed above the level of 1.0019, when a buy signal was formed, after which the price was also unable to continue moving up. Therefore, the first two signals closed at a loss of about 60 points. Nevertheless, two good sell signals formed further. In the first case, the price went down 35 points, in the second - 40 points. The position had to be closed manually Everything, since the nearest target level was far enough away. Most of the loss was covered, and a loss of 20 points is not critical.
COT report:
The Commitment of Traders (COT) reports on the euro in the past few months clearly reflect what is happening in the euro/dollar pair. They showed an openly bullish mood of commercial players for most of 2022, but at the same time, the euro fell steadily at the same time. At this time, the situation is different, but it is NOT in favor of the euro. If earlier the mood was bullish and the euro was falling, now the mood is bearish and... the euro is also falling. Therefore, for the time being, we do not see any grounds for the euro's growth, because the vast majority of factors remain against it. During the reporting week, the number of long positions in the non-commercial group decreased by 800, while the number of shorts increased by 7,300. Accordingly, the net position decreased by about 6,500 contracts. After several weeks of weak growth, the decline in this indicator resumed, and the mood of major players remains bearish. From our point of view, this fact very eloquently indicates that at this time even commercial traders still do not believe in the euro. The number of long positions is lower than the number of short positions for non-commercial traders by 43,000. Therefore, we can state that not only does the demand for the US dollar remain high, but that the demand for the euro is quite low. The fact that major players are in no hurry to buy the euro may lead to a new, even greater fall. The euro has not been able to show even a tangible correction over the past six months or a year, not to mention something more. The highest upward correction was about 400 points.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. August 26. The euro will continue to fall because there are no other options.
Overview of the GBP/USD pair. August 26. Perhaps the new prime minister of Great Britain is ready to press the "nuclear button".
Forecast and trading signals for GBP/USD on August 26. Detailed analysis of the movement of the pair and trading transactions.
EUR/USD 1H
The pair maintains a downward trend on the hourly timeframe. Since there was a rebound from the trend line yesterday, today we have the right to expect a resumption of the downward movement. We can expect the euro to sharply rise not earlier than when it overcomes the trend line. We highlight the following levels for trading on Friday - 0.9900, 1.0019, 1.0072, 1.0124, 1.0195, 1.0269, as well as Senkou Span B (1.0147) and Kijun-sen (0 .9984). There is not a single level below the 1.0000 level, so there is simply nothing to trade there. Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. There are also secondary support and resistance levels, but no signals are formed near them. Signals can be "rebounds" and "breakthrough" extreme levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price has gone in the right direction for 15 points. This will protect you against possible losses if the signal turns out to be false. There will be nothing interesting in the European Union on August 26, on the other hand, reports on personal income and expenses of the population will be released in the US. However, of course, traders will not be attracted to such data, instead they will focus on Federal Reserve Chairman Jerome Powell's speech in the evening. Everything will depend on whether Powell will tell the market something important and new.
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.
