EUR/USD 5M
The EUR/USD pair unexpectedly started a strong upward correction on Monday. More precisely, it started to do so at the end of last week, and just continued on Monday. The last local high was overcome quite quickly and easily, so the pair can now continue moving up to the Senkou Span B line. But the euro's further growth will depend on the ability of traders to overcome the Ichimoku cloud on the 4-hour timeframe. Without overcoming the Senkou Span B line, there will be no succeeding growth. The euro has already grown on Monday, when there was not a single macroeconomic report. Of course, traders could start taking profits on the short positions that they have been actively opening in recent months. We talked about this earlier: it will be very problematic to predict the beginning of a correction on such a trend. Nevertheless, we still do not expect a strong growth from the euro, although we assume that the growth may continue for another 200-300 points. Still, the pair cannot move without corrections constantly in one direction. But this correction will be purely technical.
But everything with trading signals was very sad on Monday, because during the day the price did not reach a single level or line. At the very beginning of the European trading session, the pair approached the level of 1.0072 within an arm's length, but still failed to work it out even with an error. Thus, trades should not have been opened during the day.
COT report:
Commitment of Traders (COT) reports on the euro over the past six months have raised a huge number of questions. The chart above clearly shows that they showed a blatant bullish mood of professional players, but at the same time, the euro was falling at the same time. At this time, the situation has changed, and NOT in favor of the euro. If earlier the mood was bullish, but the euro was falling, now the mood has become bearish and... the euro is also falling. Therefore, for the time being, we do not see any grounds for the euro's growth, because the vast majority of factors remain against it. During the reporting week, the number of long positions increased by 100, and the number of shorts in the non-commercial group increased by 8,500. Accordingly, the net position decreased again, by almost 8,500 contracts. The mood of the big players remains bearish and has even increased slightly in recent weeks. From our point of view, this fact very eloquently indicates that at this time even commercial traders do not believe in the euro. The number of longs is lower than the number of shorts for non-commercial traders by 25,000. Therefore, we can state that not only the demand for the US dollar remains high, but also the demand for the euro is quite low. This may lead to a new, even greater fall of the euro. In principle, over the past few months or even more, the euro has not been able to show even a tangible correction, not to mention something more. The highest upward movement was about 400 points.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. July 19. Important achievements of the euro and the pound.
Overview of the GBP/USD pair. July 19. The pound is resurrected from the dead. How long?
Forecast and trading signals for GBP/USD on July 19. Detailed analysis of the movement of the pair and trading transactions.
EUR/USD 1H
The downward trend continues on the hourly timeframe, but since there is neither a trend line nor a channel, one can only navigate along the Senkou Span B line. If the price remains below it, then the likelihood of a resumption of a long-term downward trend will increase. If it goes higher, the euro will get a chance to strengthen by another 100-200 points. On Tuesday, we allocate the following levels for trading - 1.0000, 1.0072, 1.0340-1.0366, 1.0485, as well as Senkou Span B (1.0243) and Kijun-sen (1.0075). 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. There are no major publications or events scheduled for July 19 in the US. But the EU will publish a report on inflation, to which, of course, the attention of the market will be riveted. The market shows a big reaction to data from overseas, but this report still needs to be worked out, since the future monetary policy of the European Central Bank, whose meeting will be held this week, depends on it.
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.
