EUR/USD 5M
Yesterday, the EUR/USD pair again tried to leave the horizontal channel (1.0471-1.0579) through its upper border. With the same success as the day before. Thus, over the past day, the technical picture has not changed at all. The flat remains flat. Yesterday, the pair had a chance to change something, but, as we predicted days earlier, after the release of the US inflation report, the pair only showed a surge in volatility, and after a few hours returned to the levels at which it was before the report was published. Inflation itself slowed to 8.3% in April, which is worse than forecasts, but better than the previous value. However, inflation does not really matter at this time, because whatever it is, the Federal Reserve will still raise the rate in the coming months and even a year. Therefore, the dollar initially grew, then fell, then rose again. There were no other macroeconomic statistics on Wednesday, but there was a speech by European Central Bank President Christine Lagarde, whose rhetoric again disappointed. The euro currency again did not receive any support from Lagarde. There was no mention of a possible rate hike this summer.
As for trading signals, two of them were formed. Both are near the area consisting of the critical line and the extreme level 1.0579. The pair bounced off it twice. In the first case, it went down 50 points, in the second - 20. In both cases, the short position had to be closed manually, since the price never reached the nearest target level. Nevertheless, even in this scenario, it was possible to earn about 20 points.
COT report:
The latest Commitment of Traders (COT) reports on the euro raised more questions than they answered! But finally the situation began to change and now the COT reports more or less reflect the real picture of what is happening on the market, as the mood of the non-commercial group has become bearish. The number of long positions decreased by 14,500 during the reporting week, while the number of shorts in the non-commercial group increased by 14,000. Thus, the net position decreased by 28,500 contracts per week. This means that the bullish mood has changed to bearish, as the number of short positions now exceeds the number of non-commercial traders' long positions by 6,000. However, what happened in the last reporting week is a double-edged sword. On the one hand, COT reports now reflect what is happening on the market. On the other hand, if now the demand for the euro has also begun to fall, then we can expect another new fall in this currency. Recall that in recent weeks, professional traders, oddly enough, maintained a bullish mood and bought the euro more than sold. And even in this scenario, the euro fell like a stone. What will happen now, when the major players have begun to sell the euro? Demand for the dollar remains high, demand for the euro falls. Thus, it is quite reasonable now to expect a new decline in the euro/dollar pair. Moreover, the reaction to the Federal Reserve's hawkish meeting was not quite adequate.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. May 12. Christine Lagarde is stubbornly silent about the rate hike.
Overview of the GBP/USD pair. May 12. US inflation has not impressed.
Forecast and trading signals for GBP/USD on May 12. Detailed analysis of the movement of the pair and trading transactions.
EUR/USD 1H
You can clearly see on the hourly timeframe that the pair has been desperately trying to correct in recent weeks, but in fact it has been inside the horizontal channel for two weeks already. It can spend as much time as it likes inside this channel. The bulls are now absent from the market, and the bears do not understand whether it is advisable to sell the euro near its 20-year lows. We highlight the following levels for trading on Thursday - 1.0340-1.0369, 1.0471, 1.0579, 1.0637, 1.0729, as well as Senkou Span B (1.0605) and Kijun-sen (1.0563). Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. There are also secondary support and resistance levels, but no signals are formed near them. Signals can be "rebounds" and "breakthrough" extreme levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price has gone in the right direction for 15 points. This will protect you against possible losses if the signal turns out to be false. No important events or reports are scheduled for May 12 in the European Union. Only secondary data will be released in the US today, such as a report on the number of applications for unemployment benefits, which will definitely not provoke a reaction from traders (unless the actual value differs from the forecast one and a half times or more).
On 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.
