M5 chart of EUR/USD
On Thursday, the euro/dollar pair entered a bearish correction following the steep growth of the past several days. As a reminder, the price consolidated below the ascending trend line. Given this fact, we could anticipate a continuation of the downtrend. However, the quote failed to settle below the Senkou Span B. So, the euro has been bullish over the past several days. Still, there have been hardly any reasons for this increase. It may well be that the euro simply followed the pound's suit. Indeed, the sterling advanced considerably following the ruling of the Supreme Court against holding a new independence referendum by Scotland's government. Nevertheless, it is just a theory. Speaking of the macroeconomic calendar that contained important releases only on Wednesday, it remains unclear why the euro went up anyway. Given that the price is still below the swing high, the bearish correction may extend to the Senkou Span B.
When it comes to trading signals on Thursday, the 5-minute chart shows that the pair traded mostly horizontally. In other words, no trading signals were made on Thursday, so there was no need to open trades at all.
As for COT reports in 2022, they reflected bullish sentiment in the first six months of the year although the euro was bearish. Then, they illustrated bearish sentiment for several months with the euro being also bearish. Currently, the net position of non-commercial traders is again bullish and increasing. Meanwhile, the euro has hardly retreated from its 20-year lows. This is due to the fact that demand for the greenback is high amid a difficult geopolitical situation in the world. Therefore, despite a rise in demand for the euro, buoyant demand for the dollar does not allow the euro to strengthen. During the reporting week, the number of long positions held by non-commercial traders rose by 7,000 and that of short positions increased by 2,000. Consequently, the net position advanced by 5,000. The euro's recent growth is gradually coming in line with the figures illustrated in the COT report. Still, the greenback may resume growth under the influence of geopolitical factors or the lack of factors for further strengthening in the euro. The green and red lines of the first indicator moved far away from each other, which may indicate the end of the uptrend. The number of long positions exceeds that of short positions by 113,000. Therefore, the net position of non-commercial traders may continue to rise further, but without triggering a similar rise in the euro. When it comes to the total number of longs and shorts across all categories of traders, there are now 39,000 more short positions (635,000 vs 596,000).
H1 chart of EUR/USD
In the H1 time frame, EUR/USD may resume the uptrend and update its latest swing high. Although the price broke through the trend line, fundamental factors provide little support for the euro. Therefore, the market is now bullish. Anyway, we are still anticipating a strong bearish correction. On Friday, trading levels are seen at 1.0119, 1.0195, 1.0269, 1.0340-1.0366, 1.0485, 1.0579, 1.0637, as well as Senkou Span B (1.0207) and Kijun-sen (1.0333). Ichimoku indicator lines may move during the day, which should be taken into account when determining trading signals. There are also support and resistance although no signals are made near these levels. Signals can be generated whenever the price bounces or breaks through extreme levels and lines. Don't forget to place a stop-loss order at the breakeven point when the price passes 15 pips in the right direction. It can help you minimize losses when a signal turns out to be false. On November 25th, Luis de Guindos, the Vice-President of the ECB, will give an interview. Given that the European regulator is likely to remain aggressive, which traders are prepared for, his speech will hardly influence the market. In the United States, no interesting macro releases are due.
Indicators on charts:
Resistance/support - thick red lines, near which the trend may stop. They do not make trading signals.
The Kijun-sen and Senkou Span B lines are the Ichimoku indicator lines moved to the hourly timeframe from the 4-hour timeframe. They are also strong lines.
Extreme levels are thin red lines, from which the price used to bounce earlier. They can produce trading signals.
Yellow lines are trend lines, trend channels, and any other technical patterns.
Indicator 1 on the COT chart is the size of the net position of each trader category.
Indicator 2 on the COT chart is the size of the net position for the Non-commercial group of traders.