EUR/USD 5M
The EUR/USD pair continued its upward movement on Wednesday. In the afternoon, bulls still moved away from the market a bit, thus showing their readiness for the results of the European Central Bank meeting. In our fundamental articles, we have already said that most likely in this way, traders were really preparing for two meetings of central banks – in the European Union and the UK - because the euro and the pound moved almost identically this week. And most importantly– there were no fundamental reasons for the growth of the euro and the pound. Moreover, on Monday, a weak report on Eurozone GDP was supposed to provoke a fall in the euro. And yesterday, a weak report from ADP was supposed to provoke a fall in the dollar, but at that time the US currency was just strengthening. Thus, the market showed its complete disinterest in macroeconomic statistics this week. We can only hope that Thursday and Friday will follow a different scenario. Now let's look at trading signals. There was only one yesterday, but it was quite good. The pair bounced off the Senkou Span B line and the extreme level of 1.1274, after which it managed to go up about 45 points. That is how much traders could get the most by opening a long position according to our recommendations. However, in the area of the highs of the day, the price did not meet any important line or level, so that it was possible to unambiguously interpret the completion of the upward movement and close the long positions. Therefore, the only way out of the deal was to manually close it. In general, the euro continues to be in a short-term upward trend, but no one can predict what will happen tomorrow. Therefore, the concept of a trend is now quite formal. The volatility of the environment was about 64 points, which is an average value.
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 3. The euro received unexpected support and shot up again.
Overview of the GBP/USD pair. February 3. There is no limit to the optimism of traders. The pound continues to rise non-stop.
Forecast and trading signals for GBP/USD on February 3. Detailed analysis of the movement of the pair and trading transactions.
EUR/USD 1H
On the hourly timeframe, the euro/dollar pair continued to move up for most of Wednesday. The downtrend line was overcome this week, which could mean that a new upward trend will now begin to form. But we wouldn't jump to conclusions. First, we need to wait for the results of the ECB meeting. Secondly, the fundamental background still does not support the European currency at all. Therefore, it is still very difficult to count on its strong strengthening. On Thursday, we allocate the following levels for trading - 1.1192, 1.1234, 1.1274, 1.1360, as well as the Senkou Span B (1.1271) and Kijun-sen (1.1224) 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 "breakthroughs" 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 against possible losses if the signal turns out to be false. The results of the ECB meeting will finally be published in the European Union on February 3. The market has been waiting for this event since the beginning of the week, but it may well be that there will be no reaction. Simply because the ECB is unlikely to make any important decisions at this meeting. Nevertheless, ECB President Christine Lagarde can make a couple of loud statements. A fairly important index of business activity in the ISM services sector will be released in America today. However, it is likely to be in the shadow of the ECB meeting.
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.
