EUR/USD 5M
The EUR/USD pair traded weakly during the last trading day of the week, but very good for traders. Not a single important macroeconomic report was published on Friday, either in the US or in the European Union. Thus, traders had nothing to react to during the day. Therefore, the volatility of the EUR/USD pair was very weak again, only 40 points. However, in recent weeks, we have even managed to get used to such volatility, so it did not cause any surprise. Moreover, despite the weak movements during the day, an excellent buy signal was formed. The price bounced off the extremum level of 1.1666 at the very beginning of the US trading session and subsequently rose to the extremum level of 1.1704. Thus, a long position brought traders about 30 points of profit. No more signals were formed, and the rebound from the level of 1.1704 should not be considered as a signal, since the time was approaching the night and the close of the market on the weekend.
EUR/USD 1H
The quotes of the pair hit the level of 1.1666 twice and bounced off it twice on the hourly timeframe. Thus, a new support level has formed, which may stop the pair from going down. Basically, on Friday, traders also managed to get the pair out of the descending channel. However, this moment is still very doubtful, because the bulls did not manage to overcome the level of 1.1704. Therefore, so far the price has moved away from its lows by only 40 points. The dollar may continue to grow in the current environment. Take note that the markets believe that the Federal Reserve will announce the start of curtailing the quantitative stimulus program in the near future, which is undoubtedly a factor in favor of the dollar. However, no matter how the market burns out, buying the dollar in advance. This may lead to the fact that when the corresponding decision of the Fed is made, the markets will already be saturated with long positions on the greenback and it will begin to fall in price contrary to sound logic. Thus, we remind you that any fundamental theory or assumption must be confirmed by technical signals. On Monday, we continue to recommend considering trading from important levels and lines. The nearest important levels at this time are 1.1612, 1.1666, 1.1704, 1.1744, 1.1805, as well as the Senkou Span B (1.1802) and Kijun-sen (1.1727) 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 23, the United States and the European Union will publish business activity indices for services and manufacturing for August. If the actual values differ greatly from the forecasted values, this may provoke a market reaction. Otherwise, the pair can all move in their own style of the previous weeks.
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 40 points during the last reporting week (August 10-16). Since the European currency has generally been falling in recent weeks, it is not surprising that the Commitment of Traders (COT) report showed that the bullish sentiment has weakened among professional traders. This is clearly seen on the first indicator, which has been showing a weakening of bullish sentiment since February. The green and red lines are narrowing, indicating the end of the upward trend. However, the upward trend itself cannot be considered complete yet, and the latest COT report allowed the green line (the net position of the "non-commercial" group of traders) to start increasing. This means that the bullish mood among the major players is strengthening again, so it is possible that a new upward trend will start in the near future. The second indicator also signals an increase in the net position. It clearly shows that the volume has grown, and accordingly the likelihood of a new appreciation of the euro is increasing. Professional traders opened 21,600 buy contracts (longs) and closed 4,400 sell contracts (shorts) during the reporting week. Thus, the net position grew by 26,000 at once, which is a lot even for the euro currency. However, as we can see, in the next few days the euro resumed its decline, so the new COT report may already show a decrease in the net position. In any case, as the bullish sentiment persists, as the total number of open contracts for buying from non-commercial exceeds the total number of contracts for selling. Therefore, we continue to expect the upward trend to resume.
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.
