EUR/USD 5M
Yesterday, the EUR/USD pair was trading much more calmly than it was on Monday. Despite the fact that nothing has changed at all in fundamental and macroeconomic terms, the nature of the pair's movement has changed to the opposite. If on Monday the quotes just went up ahead, then on Tuesday they began to correct. And all this in the complete absence of any news and macroeconomic information. We have already repeatedly said in our articles (especially fundamental ones) that at this time only two factors affect the EUR/USD pair: technical and fundamental. And so far, the pair's movement is fully consistent with these factors, which speak in favor of the fact that the global upward trend will continue. Thus, whether there are news and reports or not, the main thing is that the overall picture of the state of affairs corresponds to our expectations. Yesterday, very few signals were formed during the day. If on Monday traders could do a good job in the foreign exchange market, then on Tuesday there was practically nothing to do there. The upward movement began during the Asian trading session, and by the beginning of the European one it was already in full swing. The price quickly reached the next resistance level at 1.2073 and bounced off it. However, this level is not an extreme, so it does not generate signals. Therefore, it was necessary to wait for the level of 1.2108 or 1.2042 to be reached. These were the closest levels around which signals could form. The pair reached the 1.2042 level at the very beginning of the US session and generated a sell signal, but the bears were too weak to continue pulling the pair down. After forming a sell signal, the quotes did not fall by 15 points, so it was not possible to set Stop Loss to breakeven. As a result, the trade was closed at a loss of 10 points, as the pair returned to the area above the 1.2042 level, thus forming a buy signal. However, the upward movement also did not continue, so it was not possible to earn money on this deal either.
EUR/USD 1H
You can clearly see how the pair perfectly reached the 1.2073 level, and then the 1.2028 level on the hourly timeframe. The extremum level of 1.2081 has already appeared today - this is yesterday's high. So now we can say that the pair has only slightly corrected and failed to even reach the critical line in its correction. Therefore, the upward movement can resume at any time. No important event or report from the European Union and the United States on Wednesday, April 21. Therefore, you will still have to rely solely on technical signals when making trading decisions. The beginning of this week, however, showed that traders absolutely do not need a foundation or report to stick to the general plan. We still recommend trading from important levels and lines that are indicated on the hourly timeframe. The nearest important levels are 1.1988, 1.2081 and 1.2108, as well as the Kijun-sen line (1.2011). Pullbacks and breakouts of these levels and lines can serve as signals. 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 your trades against possible losses if the signal turns out to be false.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
Recall that the EUR/USD pair increased by 100 points during the last reporting week (April 6-12). Notably, professional traders have been actively reducing buy contracts (longs) and increasing sell contracts (shorts) for the past six weeks. The total number of buy contracts from the non-commercial group of traders remains twice as large as the number of sell contracts. This indicates bullish sentiment among non-commercial traders although it has been less strong in recent weeks. The new COT report showed minimal changes. During the reporting week, major players opened 2,200 buy contracts and closed 2,200 sell contracts. Thus, the net position slightly increased by 4,400. That is, the mood of the major players became more bullish. We said earlier that the Commitment of Traders (COT) report data suggested the end of the upward trend back in September 2020. However, from that moment, the upward trend continued, and it may resume now. This is happening due to the flood of liquidity into the US economy. So, what exactly do COT reports display? They reflect the actions of major players of the foreign exchange market, in particular, those players who make the majority of transactions on Forex. However, COT reports do not take into account such a factor as the inflation of the money supply. Here is a paradox: large players sell off the European currency, but it will still rise in price in the end, since the amount of US dollars in the economy and markets is growing. The logic behind it is as follows: the supply grows and the price falls. Therefore, during this year of pandemic, COT reports do not always accurately reflect the actual market situation. However, they clearly show how the sentiment of professional players is changing.
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.
