EUR/USD 5M
The EUR/USD pair corrected slightly upward during the penultimate trading day of the week, but generally remained within the downward trend. The upward pullback reached 42 points. Needless to say, this is really just a pullback, not even a correction. Thus, firstly, the volatility for the pair remains very low, and, secondly, the US dollar continues to gravitate towards growth, but it does so very sluggishly. Therefore, we once again note that the dollar could stop strengthening at any time, although it retains good chances of growth to the level of 1.1700 in the context of global technical factors. Yesterday, there were at least five events and reports that could catch the attention of traders. Therefore, we had to trade in accordance with them. Let's start looking at trading signals and their interaction with the foundation and macroeconomics. The first two signals formed near the extremum level of 1.1851 and both turned out to be false. However, at the same time, European Central Bank President Christine Lagarde made a speech in the European Union (figure "1" in the chart), and also published the index of business activity in the manufacturing sector (figure "2") and the unemployment rate (figure "3"). Thus, it doesn't even matter whether Lagarde communicated something important or not, she could do it, therefore, these signals should not be rejected. The unemployment report turned out to be stronger than forecasted, and therefore, it caused the euro to strengthen, as a result of which the price settled above the level of 1.1851. This buy signal was formed after the European events, so it could theoretically be worked out, however, two false signals had already been generated before it formed near the level of 1.1851. Therefore, this moment was at the discretion of traders. In any case, even an open long position would not have brought profit, since the price returned to the level of 1.1851 in the US session, that is, it would have closed by Stop Loss at breakeven. So, today it was not possible to make money and even just open deals. This also happens. Sometimes.
Overview of the EUR/USD pair. July 2. Inflation, unemployment and business activity in the European Union are not of interest to traders.
Overview of the GBP/USD pair. July 2. Andrew Bailey reassures the markets about inflation, Andy Haldane disagrees.
EUR/USD 1H
The H1 timeframe also clearly shows the downward trend, but there is still no trend line or channel. Yesterday there were a lot of important events and publications, but they practically had no effect on the overall technical picture. As we said earlier, macroeconomic events only have a local impact on the pair. On Friday, we still recommend trading from important levels and lines. The nearest important levels at this time are 1.1800, 1.1837, 1.1922 and 1.1971, as well as the Senkou Span B (1.1997) and Kijun-sen (1.1907) lines. The Ichimoku indicator lines can move 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. Today, Lagarde is set to speak in the European Union, and we also have the report that traders have long been waiting for in America.This is, of course, the Nonfarm Payrolls report, which will show how many new jobs outside the agricultural sector were created in June. Forecasts say about 700,000, but in reality the figure may be completely different. Remember that the last two reports were worse than forecasted. The unemployment rate and the change in average wages will also be published. However, this news will naturally be less important to traders.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair fell by 200 points during the last reporting week (June 15-21). We recommended in previous articles to wait for the publication of the new Commitment of Traders (COT) report, since it should have included those days when traders were actively working out the results of the Fed meeting. It was then that the currency pair fell by 250 points, after which it is recovering at this time. According to the latest COT report, professional traders closed about 5,000 buy contracts (longs) and opened 24,000 sell contracts (shorts) during the reporting week. This means that the net position for the group of non-commercial traders dropped by 29 thousand at once, which is quite a lot. Thus, the bullish sentiment of the major players is still bullish, but continues to weaken. In principle, the weakening of the bullish sentiment is clearly visible both in the first indicator and in the second. On the first indicator, the green line (net position of the non-commercial group) began to approach the red line (net position of the commercial group), which means the end of the current trend. Perhaps it is the global trend that will not end, but there is no point in denying that a new round of the downward movement has now begun. The second indicator shows a decrease in the size of the net position for non-commercial traders over time. The same thing: since this indicator is falling, this means that the chances for the euro's growth are falling at this time. However, in general, we recall that the total number of Buy-positions for large players is now 210 thousand, and Sell-positions - 120 thousand. Therefore, the mood is still bullish.
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.
