EUR/USD 5M
The EUR/USD pair was generally trading down last Friday. However, this was not a calm decline, when traders can calmly work it out and make a profit. There were at least several upward pullbacks during the day, so trading was difficult. There was enough macroeconomic information and fundamental events. And although we cannot say that these events greatly influenced the euro/dollar pair, a certain influence was still present nonetheless. Let's try to analyze the trade deals last Friday and understand which deals should have been opened and which shouldn't. Take note that there wasn't any signal at the European trading session. The price failed to approach the extremum levels 1.2190 and 1.2243, so there were no rebounds or breakthroughs. However, in the first half of the day, the European Union began to publish macroeconomic reports and traders learned that the business activity indices (figure "1") had grown strongly both for the service sector and for the manufacturing sector. As you can see, the euro started to rise by around 20 points after these reports were released. Although it fell before, it turns out that the EU reports worked against the intraday trend. European Central Bank President Christine Lagarde's speech (number "2") began at around lunchtime, who has not mentioned anything interesting to the markets in recent times. However, this time Lagarde said that in the near future the central bank is not going to consider the possibility of curtailing the quantitative stimulus program, since the economy is still very weak. This information has already negatively affected the pair's movement - quotes fell by 40 points. And then they immediately began to quickly recover. It was at the moment of this recovery that the first two signals of the day - buy and sell - were formed to overcome the level of 1.2190. However, naturally, a short position should not have been opened, since the movement was clearly provoked by an important event, and a long position should not have been opened, because Lagarde's speech had not yet ended at that time. Afterwards, the US published business activity indices for the services and manufacturing (figure "3"), which also sharply grew compared to the previous month. Thus, it was also better not to consider the third sell signal. Then one buy signal was generated, the second sell signal, which made it possible for traders to earn 10 points, no more. Not the best day in terms of trading, but it's good that there are no losses.
Overview of the EUR/USD pair. May 24. Christine Lagarde cooled the fervor of the bulls, but hardly for long.
Overview of the GBP/USD pair. May 24. Is the pound on the verge of collapse? Or just a couple of unsuccessful attempts to overcome the 42nd level?
EUR/USD 1H
The upward trend persists on the hourly timeframe, but the pair began a new round of correction, stopping at the level of 1.2160 for the second time. Therefore, since the euro did not overcome this level on Friday, we expect the upward movement to resume. Senkou Span B line and trend line are also located near this level. Therefore, it will be possible to talk about a strong downward movement not before all these three obstacles are overcome. Today, we still recommend trading from important levels and lines that are indicated on the hourly timeframe. The nearest important levels at this time are 1.2160, 1.2190 and 1.2243, as well as the Senkou Span B (1.2147) and Kijun-sen (1.2191) 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. Neither the European Union nor the United States has a single important report or event scheduled for Monday. The foundation will be missing on this day. Therefore, volatility may decrease. However, this does not mean that there will be no trend movement during the day, although the likelihood of this is high. You need to be careful today and not enter the market if there are signs of a flat.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair rose by only 20 points during the last reporting week (May 11-17). The new Commitment of Traders (COT) reports, which was released yesterday in the US, showed that professional traders continue to build up buy positions in the European currency. A total of 10,700 Buy contracts (longs) and 1,600 Sell contracts (shorts) were opened. Thus, the net position increased by another 9,000 contracts. Take note that a few weeks ago the "non-commercial" group of traders, which is considered the most important of all, began to increase purchases of the euro again. We have repeatedly said that we believe the main reason for the euro's growth and the greenback's fall is the flooding of the American economy with dollars. But the COT reports show that the big players are also joining the trend, which is not in their power this time, but in the power of the Federal Reserve and the US government. One way or another, but the demand for the euro is growing, the supply of the dollar is increasing, so wherever you go, there is a wedge everywhere. Recall that around fall 2020, the COT reports showed the end of the upward trend, but either the bears simply lacked the strength and desire for a new downward trend, or the money from the Fed outweighed the scales, but the uptrend resumed. The first indicator eloquently shows that the red and green lines are moving away from each other again, which is a sign of an upward trend. In simpler terms, this means that professional players continue to build up longs, and commercial traders (hedgers) - build up shorts. Therefore, at this time, the COT reports again speak in favor of the fact that the euro will continue to grow.
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.
