Analysis of EUR/USD, 5-minute chart
The euro/dollar trade did not show any interesting movements on Tuesday. Volatility fell sharply, so it was difficult to expect good movements and good signals. Nevertheless, the euro still showed a moderate growth and did not fall during the European session, as one would expect once the price overcomes the uptrend line. Now the pair is between the Senkou Span B and Kijun-Sen lines, so the uptrend is not entirely canceled yet. If the price manages to overcome both lines of the Ichimoku indicator, then we can surely say that a downtrend has begun. There was no fundamental background in both the EU and USA, which partially explains the low volatility. Today the situation will be a bit better, but of course there will be no important reports and events. There will be only some minor ones. So, low volatility may persist.
Yesterday's trading signals were also nothing out of the ordinary. All the day long the pair was moving near the level of 1.0269, regularly crossing it up and down. Naturally, there were a lot of signals near this level, all of which were false. Traders could try to use one or two signals, but by the US trading session it became clear that the movement was flat. Anyway, you could have incurred a small loss on any trade, as the pair would not pass even 15 pips in the right direction, which would allow setting the Stop Loss to Breakeven.
COT report
The Commitment of Traders (COT) reports on the euro in 2022 are a paradox. Halfway through the year they showed an outright bullish mood of commercial players, but at the same time the euro was falling steadily. Then for a few months they showed a bearish mood, and the euro also steadily fell. Now the net position of the non-commercial traders is bullish again and getting stronger, and the euro has hardly moved away from its 20-year lows. This is happening, as we said, because demand for the U.S. dollar remains very high amid the difficult geopolitical situation in the world. So even if the demand for the euro is rising, the high demand for the dollar still does not allow the euro itself to rise as much. In the given period, the number of long positions from the non-commercial group increased by 7,000, whereas the number of shorts - by 2,000. As a result, the net position increased by about 5,000 contracts. The euro has been slowly rising in recent weeks, which already coincides with the readings of the COT report. At the same time we think that the dollar will rise due to the same geopolitics or due to the lack of factors for the euro's growth. The green and red lines of the first indicator are far away from each other, which may indicate the end of the uptrend (which, in fact, never happened). The number of longs exceeds the number of shorts by 113,000. Thus, the net position of the non-commercial traders may go on rising but it may not provoke the same growth for the euro. If we look at the overall indicators of open longs and shorts across all categories of traders, then there are 39,000 more shorts (635,000 vs 596,000).
Analysis of EUR/USD, 1-hour chart
The EUR/USD pair is trying to pull back a bit on the one-hour chart, but it looks like it will fall, which is what we have been waiting for in the last few weeks. The target might be the Senkou Span B, and then everything will depend on whether the price overcomes it or not. On Wednesday, the pair may trade at the following levels: 1.0072, 1.0119, 1.0195, 1.0269, 1.0340-1.0366, 1.0485, 1.0579, and also Senkou Span B lines (1.0207) and Kijun-Sen (1.0330). Lines of the Ichimoku indicator may move during the day, which should be taken into account when determining trading signals. There are also support and resistance levels, but signals are not formed near these levels. Bounces and breakouts of the extreme levels and lines could act as signals. Don't forget about stop-loss orders, if the price covers 15 pips in the right direction. This will prevent you from losses in case of a false signal. The EU and USA will both publish the data on manufacturing and services PMI. The US will also publish the report on durable goods orders. Unfortunately, these reports are unlikely to greatly influence the market. However, there might still be a significant reaction.
What we see on the trading charts:
Price levels of support and resistance are thick red lines, near which the movement may end. They do not provide trading signals.
The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, moved to the one-hour chart from the 4-hour one. They are strong lines.
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 reflects the net position size of each category of traders.
Indicator 2 on the COT charts reflects the net position size for the non-commercial group.
