EUR/USD 5M
The EUR/USD pair showed nothing extraordinary on Wednesday. You could even say that the movements were absolutely predictable. Before the inflation report was published, an absolute flat with low volatility continued, and then there were quite active movements after it was released. The only thing that was difficult to predict was the actual value of the report and the market's reaction. As it turned out, the consumer price index was 5.4% y/y, which fully coincides with the previous value. Markets expected the rate of price growth to slightly decrease, to 5.3% y/y, but this did not happen. Thus, we can say that the US dollar fell in price due to the fact that inflation did not start to slow down in the US. Although, as we have already said, the inflation indicator itself is a rather controversial indicator. For example, a further rise in the CPI could mean that traders are more likely to wind down the quantitative stimulus program in the near future, which is already good for the dollar. One way or another, there was only one report during the day, and there were no signals at all during the day. Volatility reached 45 points on Wednesday, so we once again note that with such volatility, it is not necessary to count on the formation of many profitable signals. Throughout the entire day, the price has never reached even a single important line or level. There was only one subtle point that could be used to open a trade. In the morning the price approached the extremum level of 1.1704 at a distance of two points. Thus, here, if desired, one could see a rebound from the level and a buy signal. This is a completely unobvious moment, however, inaccurate rebounds occur not only when the price goes down a dozen points below the level. Today, too, there was an inaccurate rebound, after which a rather strong upward movement began. Thus, it was possible to earn 20-30 points of profit.
EUR/USD 1H
The technical picture on the hourly timeframe is fully in line with our expectations. Yesterday we said that with a high degree of probability, the price will rebound from the level of 1.1700 and start an upward movement. We are still awaiting the start of a new upward trend. It is, of course, still too early to talk about a full-scale trend, but not overcoming the level of 1.1700 is a weighty argument in favor of growth. On Thursday, we still recommend trading from important levels and lines. The nearest important levels at this time are 1.1704, 1.1756, 1.1852, 1.1894, as well as the Senkou Span B (1.1837) and Kijun-sen (1.1781) lines. The Ichimoku indicator lines can change their position 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. On August 12, there will be no important macroeconomic publications either in the United States or the European Union. Only minor ones. In the EU - the volume of industrial production in June, and in the US - the number of applications for unemployment benefits. Both of these reports are unlikely to provoke any market reaction. Considering that there was an important report today, and the overall volatility of the day was 45 points, it is unlikely that it will be stronger on Thursday.
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 70 points during the last reporting week (July 27 – August 2). At the same time, the Commitment of Traders (COT) report for this week showed minimal changes in the mood of major players. During this period of time, the "non-commercial" group closed 3,000 buy contracts (longs) and 500 sell contracts (shorts). Thus, the net position for non-commercial traders decreased by another 2,500, and the mood of major players became even less bullish. Less bullish and not more bearish because at the moment, professional players still have more open buy contracts than those for selling. Thus, the global upward trend, which we talk about very often, can still resume at any moment. Pay attention to the chart above. At the moment, the quotes have not even been able to fall to their previous local low on the 24-hour timeframe. That is, at the moment it is not even possible to say that a new downward trend has begun. Everything still looks as if the pair is simply correcting against a long-term upward trend. And this correction may end in the near future. We remind you that the US currency continues to be negatively affected by the factor of the Federal Reserve's injection of billions and trillions of dollars into the economy, which inflates the money supply in the country and provokes an increase in inflation. Thus, the dollar may depreciate due to this factor, and the European currency – due to the factor of sales by its major players. The question is which of the currencies will become cheaper faster. So far, both indicators show very well what is happening with the euro/dollar pair. As you can see, when the pair decreases, the net position of major players also decreases (the second indicator), and vice versa.
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.
