EUR/USD 5M
The EUR/USD pair was trading more actively on Tuesday than it did on Monday. However, macroeconomic reports and foundation have nothing to do with it. Yesterday, we said that volatility can rise regardless of news and reports. And so it happened. Since the upward movement was present, two new buy signals were formed on Tuesday. Thus, there were few opportunities to open a trade yesterday, however, profit could be drawn from the market. In principle, the most important was the first signal - surpassing the extremum level of 1.2175 at the very beginning of the European trading session. A long position should have been opened on it, which could eventually bring at least 20 points of profit. The low is near the resistance level of 1.2200 and traders could take profits, but at the same time there was no rebound from this level, so it was possible to stay in the long positions. In this case, the deal should be closed either near the level of 1.2243, to which the price did not eventually reach, or by settling below the level of 1.2200, which also did not happen, or elsewhere in manual mode. The best option would, of course, be to close the deal before the EU GDP report was released, which would bring the most profit. And so, 20 points were definitely earned. Overall volatility of the day was more than 80 points, but signals were not formed at the very beginning of the movement, so the profit is quite modest. The second buy signal was formed when a long position had already been opened, so, of course, there was no need to buy the pair for the second time. As for macroeconomic reports, the number "1" in the chart marks the time when the GDP report for the first quarter was published. As you can see, there was no particular reaction to this report, since the second estimate of GDP did not differ in any way from the first, -0.6% in quarterly terms. The number "2" marks the beginning of the speech of the European Central Bank President Christine Lagarde, but, as we can see, no serious price changes took place after this.
EUR/USD 1H
You can clearly see that the upward trend continues on the hourly timeframe. The upward trend line remains relevant, and the price is far enough from it, so now there is no reason to anticipate the end of the upward trend. Plus, in our fundamental articles, we regularly say that global fundamental factors continue to work against the dollar, therefore, in principle, everything is just going according to plan. We expect that the dollar will continue to depreciate in 2021. On Wednesday, we still recommend trading from important levels and lines that are indicated on the hourly timeframe. The nearest important levels at this time are 1.2175, 1.2190 and 1.2243, as well as the Senkou Span B (1.2082) and Kijun-sen (1.2143) 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 15-20 points in the right direction. This will protect you against possible losses if the signal turns out to be false. The European Union is set to publish the consumer price index for April, which is likely to remain unchanged at 1.6% y/y. Therefore, if this forecast comes true, then traders will have no reason to work out this report. The minutes from the last Federal Reserve meeting will be published late in the evening in the United States, but it is unlikely that it will contain information worthy of the attention of traders, and by that time traders will have to leave the market, since it does not make much sense to trade at night.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair increased by 60 points during the last reporting week (May 4-10). Thus, the European currency continues to be in high positions and may renew its 2.5-year highs in the coming weeks. Professional traders, who have started to reduce Buy-contracts (longs) since last September, have started to increase them again in the last few weeks. Recall that the Commitment of Traders (COT) reports, firstly, do not take into account the amount of money poured into the economy (any), and secondly, they do not reflect the demand for the dollar. Thus, in recent months, COT reports do not always reflect the real picture of what is happening in the foreign exchange market. Recall that large players can sell off the euro, but if the Federal Reserve pours trillions of US dollars, the euro will still rise in price, and the COT reports will show that the demand for the euro is falling. However, recently, the group of non-commercial traders seems to have rethought some things and will now follow the trend itself, the tone of which is set by the Fed. Commercial traders opened 17,000 new buy contracts and 5,500 sell contracts during the reporting week. Thus, the net position grew by 11,500 at once, which is quite a lot. The first indicator in the chart above shows the divergence of the lines showing the net positions of commercial and non-commercial traders, so at this time we can conclude that the upward trend has resumed. The second indicator also shows that the "non-commercial" group has begun to increase buy contracts on 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.
