EUR/USD 5M
The EUR/USD pair was trading very volatile last Friday. At the same time, it made reversals quite often, so it was especially difficult to trade it. This situation was overshadowed by rather important reports from the European Union. For example, GDP became known in the second quarter, which amounted to 0.7% instead of 0-0.2% predicted. It would seem that this is a great reason to show growth! A report on inflation was immediately published, which recorded its next acceleration, this time to 8.9%. It would seem like a great occasion to show growth! But instead of all this, the pair fell (that is, the dollar rose in price), and it returned to its original positions in the afternoon. And these movements look quite trendy on the hourly timeframe, but as soon as you switch to the 4-hour timeframe, it immediately becomes clear that the pair has been trading in absolute flat for more than two weeks. As often happens, there may have been a reaction to the statistics (although it is extremely difficult to identify it), but this did not affect the overall technical picture at all. Although what's strange here, if even the results of the meetings of the Federal Reserve and the European Central Bank could not affect the mood of the market in any way?
As for trading signals, there were only three of them during the day. Since there is no trend movement now, there are no levels inside the horizontal channel either. Thus, the first trading signal was formed only when consolidating below the critical line. It turned out to be false, but the price still managed to go down 15 points, which was enough to set Stop Loss to breakeven. This was followed by the formation of a buy signal, and then another one. Moreover, the last signal (rebound from the critical line) should not have been worked out, since it was formed too late. And the first buy signal was closed very quickly by Stop Loss at breakeven, as the price returned to the critical line very quickly.
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 for most of 2022 they showed a blatant bullish mood of commercial players, but at the same time, the euro was falling. The situation has changed at this time, but NOT in favor of the euro. If earlier the mood was bullish, but the euro was falling, now the mood is 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 2,100, and the number of shorts in the non-commercial group increased by 1,000. Accordingly, the net position increased, but only by 1,000 contracts. The sentiment of the big players remains bearish and has continued to pick up 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 41,000. 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 maximum upward movement was about 400 points.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. August 1. US inflation is of key importance for the foreign exchange market.
Overview of the GBP/USD pair. August 1. The results of the Bank of England meeting may already be taken into account in the current course of the pair.
Forecast and trading signals for GBP/USD on August 1. Detailed analysis of the movement of the pair and trading transactions.
EUR/USD 1H
The pair continues to trade between the levels of 1.0120 and 1.0269 on the hourly timeframe. Thus, the flat remains and may continue for some time. Ichimoku indicator lines are not strong now. Signals can still be formed around them, but it should still be understood that the pair is now in a flat. We highlight the following levels for trading on Monday - 1.0000, 1.0072, 1.0120, 1.0269, 1.0340-1.0366, 1.0485, as well as Senkou Span B (1.0111) and Kijun-sen lines (1.0175). 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. The calendars of events for the European Union and the United States do not contain anything interesting. Thus, the chances that the euro will leave the horizontal channel today are minimal.
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.
