Analysis of EUR/USD 5M
On Thursday, EURUSD tried to start a new round of corrective movement within the downtrend, but the euro immediately stopped rising. As a result, it failed to start an upward movement, and in general, continues to fall sluggishly. Nothing has changed. In fairness, nothing could crucially change yesterday's movement, as the macroeconomic background was very weak. The EU did not release any important reports, while the US only published a report on unemployment benefit claims. There were no fundamental events either. Therefore, volatility was relatively low, which always creates problems for traders. However, in the medium term, the euro continues to fall, so everything is going according to plan.
All the trading signals were formed around the level of 1.0868. The price rebounded from this mark thrice, and once, at the very end of the day, even settled below this mark, but not for long. The price could not reach the nearest target level or line in any of the cases, and the third and fourth signals were formed too late, so they were not worth executing. After forming the first signal, the price did not even rise by 15 pips, so when the second rebound was being formed, the long position should have remained open. In general, one deal was opened, the price went in the right direction for a maximum of 42 pips, and it was possible to get a profit from it only if traders manually closed the deal.
COT report:
On Friday, a new COT report for August 8 was released. In the last 11 months, COT reports fully corresponded to what is happening in the market. The chart above clearly shows that the net position of major traders (the second indicator) began to grow in September 2022 and at about the same time the euro started climbing too. In the last 6-7 months, the net position has not risen but the euro remains at very high levels. At the moment, the net position of non-commercial traders is bullish and remains strong. The euro keeps climbing against the US dollar.
I have already mentioned the fact that a fairly high value of the net position signals the end of an uptrend. This is also confirmed by the first indicator where the red and green lines are very far from each other. Usually, it precedes the end of the trend. During the last reporting week, the number of long positions of the non-commercial group of traders fell by 12,000 and the number of short ones increased by 10,200. The net position decreased by another 22,200 contracts. The number of long positions is higher than the number of short ones of non-commercial traders by 150,000. This is a very large gap as the difference is almost threefold. Even without COT reports, it is obvious that the euro should decline but speculators are still in no hurry to sell.
Analysis of EUR/USD 1H
On the 1H chart, the pair broke out of the sideways channel, where it had spent two weeks, but this does not mean that the downward movement will be strong and stable. Most of this week's economic reports did not support the euro, but the dollar did not have many trump cards either.
On August 18, traders should pay attention to the following key levels: 1.0658-1.0669, 1.0762, 1.0806, 1.0868, 1.0943, 1.1043, 1.1092, 1.1137, 1.1185, as well as the Senkou Span B (1.0987) and Kijun-sen (1.0909) lines. The lines of the Ichimoku indicator can move during the day, which should be taken into account when determining trading signals. There are support and resistance levels that can be used to lock in profits. Traders look for signals at rebounds and breakouts. It is recommended to set the Stop Loss orders at the breakeven level when the price moves in the right direction by 15 pips. This will protect against possible losses if the signal turns out to be false.
Today, the EU will release the final estimate of its Consumer Price Index for July. Nothing lined up for the US. We will probably see weak movements and low volatility again.
Description of the chart:
Support and resistance levels are thick red lines near which the trend may end. They do not provide trading signals;
The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, plotted to the 1H timeframe from the 4H one. They provide trading signals;
Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals;
Yellow lines are trend lines, trend channels, and any other technical patterns;
Indicator 1 on the COT charts is the net position size for each category of traders;
Indicator 2 on the COT charts is the net position size for the Non-commercial group.
