EUR/USD - 24H.
The EUR/USD currency pair has lost 70 points during the current week. And taking into account the fact that four out of five trading days ended with a decline, and on the fifth day, the pair increased by 10 points. On average, the pair lost 20 points a day, and the total volatility in most cases did not exceed 40 points. Thus, the volatility of the euro/dollar pair remains ultra-low. It should also be noted that the bulls failed to overcome the Fibonacci level of 61.8%, which is also the previous local maximum. Thus, for the time being, further upward movement is in question. The bulls failed to build on the success they achieved earlier. The quotes have already left the Ichimoku cloud. However, they are still located above the critical line. However, there is no need to despair. It will be possible to talk about the resumption of the downward movement after the quotes break the Kijun-sen line. And while this has not happened, we remind you that most of the technical and fundamental factors still speak in favor of a new round of the fall of the US currency. Unfortunately, in the last few months, volatility does not count on almost any strong movement. Recall that the pair also failed to escape below the target level for the second round of the global downward correction against the upward trend of 1.1700. Thus, since the Fed has not yet announced the curtailment of the asset purchase program, we are still counting on a new fall in the US dollar. Although now, of course, a lot will depend on when the markets will start trading the pair more actively. Recall that the volatility of 60-80 points per day is considered normal for the pair.
COT report.
During the last reporting week (August 31 - September 6), the EUR/USD pair increased by 75 points. But the COT reports, which for several months in a row signaled a decrease in the net position of non-commercial traders, stopped selling the European currency right before level 0 (the first indicator). At this time, the number of open long and short positions in the "Non-commercial" group is almost the same, indicating this group's neutral mood. Formally, it remains "bullish" since a slightly larger number of purchase contracts are concentrated on the hands of large players. However, this advantage is small. Thus, the COT reports do not answer the most important questions right now. Namely: will the bears overcome the level of 1.1700 to try to form a downward trend? Are the bulls ready to start forming a new upward trend? Professional traders closed less than a thousand buy contracts during the reporting week and 16.5 thousand sell contracts. Thus, the net position immediately increased by 15 thousand, and the mood became a little more "bullish." However, do not forget about the Fed factor as well. Recall that if monetary injections into the American economy continue, this will lead to an increase in the money supply and natural inflation of the dollar. No matter how the players get rid of the European currency, if the Fed continues to print $ 120 billion a month, this will not lead to the strong growth of the dollar. We also remind that the stock market is currently growing intensively. It means that most of the money entered the economy from the Fed flows to the stock market. If investors stop buying shares, this may lead to an excess of money in free circulation, which will provoke a new fall in the dollar.
The current trading week was important for the European currency to a greater extent than for the dollar. The ECB meeting and the publication of the GDP report are important events. However, the markets did not find anything interesting for themselves because the European economy grew in the second quarter not by 2.0%, as previously expected, but by 2.2% q/q. They also did not learn anything interesting from Christine Lagarde's speech after the ECB meeting. However, they could have reacted at least to the words about reducing the pace of asset purchases under the PEPP program. And nothing was interesting at all in the States this week. Therefore, the entire calculation was precisely on the European "foundation." But, as we can see, the desire to relax among market participants is much stronger than the desire to trade.
Trading plan for the week of September 13-17:
1) On the 24-hour timeframe, the trend is changing to an upward one, despite the fall in the current week. The price has overcome the critical Kijun-sen line, so now it will tend to the upper border of the Ichimoku cloud. Unfortunately, the bulls failed to overcome the level of 1.1910, which is the previous local maximum, on the first attempt. However, we believe that this is only a temporary phenomenon. In the new week, we will expect a rebound from the critical line and the resumption of movement to the north.
2) The euro/dollar pair has consolidated above the critical line, so the continuation of the downward movement is postponed until better times. However, we have repeatedly said that we expect to complete the downward correction movement around the level of 1.1700. In any case, as long as the price is above the Kijun-sen line, it is not worth returning to sales. When fixing below 1.1700, the pair may try to fall to 1.1600.
Explanations to the illustrations:
Price levels of support and resistance (resistance/support) – target levels when opening purchases or sales. Take Profit levels can be placed near them.
Ichimoku indicators, Bollinger Bands, MACD.
Support and resistance areas – areas from which the price has repeatedly bounced earlier.
Indicator 1 on the COT charts – the net position size of each category of traders.
Indicator 2 on the COT charts – the net position size for the "Non-commercial" group.
