EUR/USD 5M
Yesterday, the EUR/USD pair was moving exactly as, probably, all traders expected from it. That is, as usual, with low volatility and most of the day without a definite direction of movement. On the one hand, the pair can even get a discount on Tuesday. Still, all the most important events of the week are scheduled for its second half, and on Tuesday not a single report was published either in the United States or in the European Union. That is, even theoretically, market participants had nothing to react to during the day. Nevertheless, the dollar started to strengthen during the US trading session, which could be a pure accident or a reaction, for example, to the negotiation of a bipartisan agreement between Republicans and Democrats on the "infrastructure" package. However, this base looks a bit far-fetched. Most likely, the dollar has risen in price a little simply because the pair cannot stay in one place forever. The overall volatility of the day was again about 40 points. All trading signals were again formed near a single extreme level. This time around 1.1881. In total, five trading signals were formed during the past day, and in an amicable way, all of them should be ignored. Simply because there is no movement at all. Because it is extremely difficult to trade with such volatility. The first two sell signals in the form of rebounds from the level of 1.1881, naturally, turned out to be false, since the price, after their formation and 10 points down, could not go down. In principle, this could have been the end of the trade on Tuesday. Because the third and fourth signals also turned out to be false. At the moment when the pair decided to move a little and formed a more or less strong fifth signal to sell, traders should have left the market and no longer trade from the level of 1.1881. Thus, the day ended with a minimal loss.
Overview of the EUR/USD pair. August 4. The US national debt is a headache for the US Treasury and the US Congress, but on the whole it is a solvable problem.
Overview of the GBP/USD pair. August 4. Bank of England meeting: the bank is different, but the market has the same questions.
EUR/USD 1H
On the hourly timeframe for the euro/dollar pair, a new round of corrective movement began within the framework of a formally continuing upward trend. "Formally" - because the trend line is rather weak, as is the upward movement itself. However, the pair may now drop to the Kijun-sen, Senkou Span B and trend lines, which are very close to each other and may form a strong support area. On Wednesday, we still recommend trading from important levels and lines. The nearest important levels at this time are 1.1756, 1.1852, 1.1881, 1.1922, as well as the Senkou Span B (1.1830) and Kijun-sen (1.1842) 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, the European Union will publish reports on business activity in the service sector and retail. However, this data is almost guaranteed not to interest the markets. Thus, more attention should be paid to the report on the change in the number of ADP employees and the ISM Service Sector PMI in the United States. These reports are much more likely to be worked out by the markets.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD increased by 5 points during the last reporting week (July 20-26). However, the pair's movements are not the main thing. The main thing is that the major players have been increasing the number of sell contracts (shorts) for the sixth week in a row and closing buy contracts (longs) for the euro currency. This is very clearly seen in the second indicator in the chart, which has been steadily declining recently. Recall that this indicator displays the net position of the "non-commercial" group, the most important group of traders. Non-commercial traders closed 5,600 buy contracts (longs) and opened 1,700 sell contracts (shorts). Thus, their net position decreased by another 7,300 contracts. This suggests that the bullish mood of professional traders continues to weaken. At the same time, we would like to note that the euro currency has not started a new downward trend and this is a very important point, from our point of view. We have already said earlier that when the red and green lines of the first indicator (the net positions of the "non-commercial" and "commercial" groups of traders) move towards each other after a long period of distance, it means that the current trend is completed and a new one is emerging. However, in our case, we are talking about a correction against a global upward trend. It turns out that, on the one hand, the readings of the Commitment of Traders (COT) reports and the movement of the pair coincide, and on the other hand, the upward trend persists, and the euro has not fallen very much and has fallen in price. Moreover, it did not even manage to update the previous local low. From our point of view, this suggests that the actions of major players are again overlapped by the actions of the Federal Reserve, which continues to print money. Thus, the money supply in the United States continues to grow, which leads to the depreciation of the dollar. And this factor negates all the efforts of major players who are getting rid of the euro.
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.
