EUR/USD 5M
The EUR/USD pair was once again trading in absolute flat on Wednesday. After the pair showed quite good volatility and trend movement on Tuesday, everything returned to normal on Wednesday. Recall that in recent months the pair has been regularly moving in an intraday flat and with low volatility. Thus, today's volatility of 36 points, on the one hand, is not surprising at all, but on the other hand, it is an absolute low. We don't even remember the last time the euro/dollar pair moved so weakly. There was only one macroeconomic report that was published on Wednesday, which did not provoke any market reaction. We are talking about inflation in the European Union in July, which amounted to 2.2% in annual terms, and has not changed compared to June. Core inflation amounted to just 0.7% y/y and did not change as compared to the previous month. Thus, traders did not even have anything to react to during the day. Nevertheless, one buy signal was formed today. This signal is a rebound from the level of 1.1707. However, after its formation, the price could not go up even 15 points and returned to the level of 1.1707. Thus, traders had the right to work out this signal with a long position, but in the second half of the day it was already absolutely clear that the market was completely flat, so the deal had to be manually closed at breakeven. In the late afternoon, another sell signal was formed, but it definitely shouldn't have been worked out. At this time, it does not even make sense to repeat that we expect a resumption of the upward trend in the EUR/USD pair. Quotes are in one place, so you need to wait for the movement to intensify.
EUR/USD 1H
The trading picture looks about the same on the hourly timeframe. After the price settled below the upward trend line, the pair's quotes dropped to the 17th level, but they could not overcome it either yesterday or today. Therefore, further downward movement is now questionable. However, at the same time, if this level is overcome, the downward movement will be able to continue with the targets of 1.1670 and 1.1633. It is unlikely that this movement will be strong, as the pair's volatility continues to be poor. On Thursday, we continue to recommend considering trading from important levels and lines. The closest important levels at this time are 1.1707, 1.1756, 1.1852, 1.1894, as well as the Senkou Span B (1.1802) and Kijun-sen (1.1755) 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. No significant reports or events in the European Union and the United States on Thursday, August 19. However, this is not important, since over the past two trading days the markets have already managed to ignore several reports from the European Union, and it is absolutely illogical to react to data from America. Moreover, on Tuesday, the US dollar was rising presumably due to the tense situation in Afghanistan, and on Wednesday it was stuck tightly at one point. So an empty news calendar doesn't really matter right now. The pair spends three out of five days without moving.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair fell by 140 points during the last reporting week (August 3-9). Since the European currency has generally fallen in recent weeks, it is not surprising that the Commitment of Traders (COT) report showed that the bullish sentiment has weakened among professional traders. However, the euro/dollar pair has been declining in recent weeks very reluctantly, and major players have massively stopped closing buy contracts and open sell contracts. A group of non-commercial traders opened 11,000 Buy-contracts (longs) and 18,000 Sell-contracts (shorts) during the reporting week. Thus, the net position for professional players decreased by another 8,000. However, the indicators below the chart show that although the net position continues to decline, the rate of its decline is decreasing. In addition, as we have already said, the euro dropped to the level of 1.1700, around which the probability of an upward reversal is very high. The first indicator shows that the green and red lines (net positions of the "non-commercial" and "commercial" groups) continue to move towards each other, which means the continued weakening of the upward trend. Recall that when the lines begin to narrow, it means the end of the current trend. However, at the same time, the situation on the chart looks just like a correction. Thus, we believe that at this time, both indicators are signaling exactly a correction. As before, we must not forget that the Federal Reserve has not yet completed the quantitative stimulus program, thanks to which the US economy continues to be pumped with money, which provokes an increase in inflation and an increase in the supply of the dollar in the foreign exchange market. Therefore, we are still expecting a new round of decline in the dollar. The sentiment of the major players remains bullish as the total number of buy contracts still exceeds the number of sell contracts.
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.
