EUR/USD 5M
The EUR/USD pair was swinging on Wednesday. During the day, there were exactly two reports that could hypothetically provoke a market reaction, and both ultimately provoked it, but the reaction, as we predicted, did not exceed 20-30 points. The very nature of the pair's movement on Wednesday resembled a "roller coaster" or, more simply, a flat. At the end of the day, we added one new level (1.0195), which will help with forming trading signals in the future. The downward trend that formed after breaking the upward trend line remains in place, and one day of respite from the fall means nothing. Quotes may once again rush to the downside today. Thus, yesterday can simply be ignored, since it did not affect the current technical picture at all. The report on GDP in the European Union turned out to be as neutral as possible, a value of +0.6% q/q was recorded, which is slightly better than the previous quarter, but slightly worse than forecasts.
Everything in regards to Wednesday's trading signals was extremely simple - not a single one was formed. The pair's volatility during the day was only 55 points, which is very low. The price moved mainly sideways and it is very good that it did not even approach any level or line of the Ichimoku indicator, otherwise a large number of false signals could have been formed.
COT report:
The 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 an openly bullish mood of commercial players, but at the same time, the euro fell steadily at the same time. At this time, the situation has changed, but NOT in favor of the euro. If earlier the mood was bullish, and 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 for the non-commercial group increased by 8,400, and the number of shorts - by 4,100. Accordingly, the net position increased by about 4,000 contracts, which is a negligible change for the euro. The mood of major players remains bearish. From our point of view, this fact very eloquently indicates that at this time even commercial traders still do not believe in the euro. The number of longs is lower than the number of shorts for non-commercial traders by 35,000. Therefore, we can state that not only does the demand for the US dollar remain high, but that the demand for the euro is also quite low. The fact that major players are in no hurry to buy the euro may lead to a new, even greater fall. The euro has not been able to show even a tangible correction over the past six months or a year, not to mention something more. The highest upward movement was about 400 points. The pair has just managed to correct by 400 points over the past four weeks. Has the plan been completed?
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. August 18. Eurozone GDP? Not interested! We continue to buy the dollar!
Overview of the GBP/USD pair. August 18. The market has clearly shown how it relates to inflation in the UK and the prospects of the Bank of England to overcome it.
Forecast and trading signals for GBP/USD on August 18. Detailed analysis of the movement of the pair and trading transactions.
EUR/USD 1H
The pair continues to form a new downward trend on the hourly timeframe. We believe that globally everything is going according to plan, as the euro corrected up by 400 points, so now there are sufficient technical reasons for the resumption of the downward trend. Macroeconomic statistics did not affect the course of trading on Wednesday, and this is even for the better. However, in the remaining two days of the week, the pair may try to form another round of upward correction to make it look more convincing. We highlight the following levels for trading on Thursday - 1.0000, 1.0072, 1.0124, 1.0195, 1.0269, 1.0340-1.0366, 1.0485, as well as Senkou Span B (1.0245) and Kijun-sen (1.0244). 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 European Union will publish its inflation report on August 18, which is the most important report this week. We believe that the market reaction will be strong, but how exactly the market will react, we do not undertake to assume. You need to be prepared for any development of events.
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.
