EUR/USD 5M
The EUR/USD pair continued to move with an upward bias on Tuesday. This is especially noticeable on the hourly timeframe, where the descending trend line was overcome. Thus, quite unexpectedly, on the eve of the European Central Bank meeting, at which serious decisions are unlikely to be made, the euro rose against the dollar by 150 points almost out of the blue. Moreover, the few reports that were published on Monday and Tuesday spoke, rather, about the continuation of the fall of the euro, and not about growth. Nevertheless, it has what we have. Yesterday, the European Union published the index of business activity in the manufacturing sector for January, which did not provoke any reaction, since it practically did not differ from the forecast. The same applies to the unemployment rate in the European Union and the ISM manufacturing index in the United States. Although the latter could provoke a movement, it also almost completely coincided with the forecast. However, due to the weak influence of macroeconomic statistics on the pair's movement, it is likely that such good trading signals were obtained. During the day, the "macroeconomics" simply did not prevent the market from trading exclusively by levels. First, a buy signal was formed when the price rebounded from the extreme level of 1.1234. Traders had to open long positions here, as the signal was strong and accurate. The upward movement stopped only near the next level - the extreme of 1.1274, from which the price bounced twice. It was necessary to close long positions at this point and open short ones. As a result, the short position also turned out to be profitable, as the price fell back to the level of 1.1234 by the end of the day, where it was necessary to take profit. As a result, it was possible to earn about 50 points on two deals of the day. Excellent result!
COT report
The new Commitment of Traders (COT) report, which was released, turned out to be very interesting. First of all, from the point of view that the European currency, even without really adjusting, began a new decline, but at the same time, recent COT reports indicate that non-commercial traders have increased buy contracts (long positions), which are the most important category. Recently, their net position has grown, and the mood has become bullish again. "Moderately bullish." However, over the past two weeks, the euro currency has fallen by 350 points, which clearly does not correspond to the mood of professional players. However, this data should not be misleading. First of all, the last decline by 150 points after the Federal Reserve meeting happened at the end of the week, so these days were not included in the latest COT report (it comes out three days late). Secondly, if we cut off the last round of the fall of the euro currency, it turns out that there has not been any strong decline yet. That is, the mood of traders may change in the direction of bearish in the next COT report, or it will not change, but then the euro will stop getting cheaper. The green and red lines of the first indicator (the net positions of the "non-commercial" and "commercial" groups) are currently moving away from each other, which indicates the beginning of a new trend. The growth of the green line indicates the beginning of a new upward trend. Therefore, we need to wait for the next COT report so that we can make a more accurate conclusion.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. February 2. The euro and the pound cannot get enough of the dollar bulls' retreat.
Overview of the GBP/USD pair. February 2. The British pound is growing more than expected and is waiting for a rate hike.
Forecast and trading signals for GBP/USD on February 2. Detailed analysis of the movement of the pair and trading transactions.
EUR/USD 1H
On the hourly timeframe, the price overcame the critical line and the trend line yesterday, and stopped the upward movement only near the even stronger Senkou Span B. A rebound from it can provoke not only a round of downward correction, but also a resumption of the downward trend. At least, the upward movement will not continue until this line is overcome. However, an important ECB meeting will be held on Thursday, and the euro may begin to fall in connection with this event. We allocate the following levels for trading on Wednesday - 1.1121, 1.1192, 1.1234, 1.1274, as well as the Senkou Span B (1.1271) and Kijun-sen (1.1212) lines. The lines of the Ichimoku indicator may change their position during the day, which should be taken into account when searching for trading signals. Signals can be "bounces" and "breakthrough" of these levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price went in the right direction of 15 points. This will protect you against possible losses if the signal turns out to be false. An important inflation report will be published in the European Union on February 2. If, as forecasts say, the consumer price index slows down, this may put pressure on the euro. A report on the change in the number of employees in the ADP private sector will be released in America today, but all the latest ADP reports have not caused any market reaction, so it will probably be the same this time.
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.
