Analysis of EUR/USD (5M)
The EUR/USD pair struggled on Friday, with volatility not exceeding 40 pips. For the second consecutive day, the pair corrected within a weak upward trend. The ascending trendline remains relevant, suggesting the euro retains upside potential. However, next week, movements and the trend will certainly depend on the FOMC meeting, Jerome Powell's speech, and possibly the JOLTs report, which will be significant simply because there are no other labor market data from the US. The pair could easily consolidate below the trendline and below the critical line, which would cancel the upward trend again.
On Friday, the Eurozone released a GDP report, along with the core PCE price index, the University of Michigan consumer sentiment index, and US personal income and spending data. Traders expecting strong movements, especially those who don't read our articles daily, were met with minimal price action. The US dollar strengthened slightly during the US session, but a 20-pip increase amid three relatively important reports is rather insufficient. Nonetheless, the flat market persists on the daily timeframe, making everything quite logical.
On the 5-minute chart, two sell signals formed in the 1.1657-1.1666 range. The price bounced off the indicated area twice and failed to cover the distance to the nearest target—Kijun-sen line—of 27 pips for the remainder of the day.
COT Report
The latest COT report was released last week and dated October 28. Thus, it is somewhat outdated. The net position of non-commercial traders has been bullish for a long time, with bears only recently gaining a slight edge at the end of 2024, which they quickly lost. Since Trump's second term began, the dollar has only been falling. While we cannot state with 100% certainty that the dollar's decline will continue, the current developments globally do suggest this direction.
We still do not see any fundamental factors supporting the strengthening of the euro, while there remains an ample supply of factors for the dollar's decline. The global downtrend is still intact, but what does it matter where the price has moved over the last 17 years? The dollar may strengthen if the global fundamental picture changes, but there are currently no signs of that.
The position of the red and blue lines in the indicator continues to indicate the retention of a bullish trend. During the last reporting week, the number of long positions in the "Non-commercial" group increased by 5,900, while the number of short positions increased by 10,300. Therefore, the net position decreased by 4,400 contracts over the week. However, this data is outdated and holds little relevance.
Analysis of EUR/USD (1H)
On the hourly timeframe, the EUR/USD pair continues to form an upward trend but is moving slowly, almost reluctantly. The price remains within the sideways channel of 1.1400-1.1830 on the daily timeframe; hence, growth towards 1.1800 can still be expected, though it remains weak overall. Fluctuations within this flat range tend to be weak and incoherent.
For December 8, we highlight the following levels for trading: 1.1234, 1.1274, 1.1362, 1.1426, 1.1542, 1.1604-1.1615, 1.1657-1.1666, 1.1750-1.1760, 1.1846-1.1857, 1.1922, 1.1971-1.1988, as well as the Senkou Span B line (1.1571) and Kijun-sen line (1.1638). The Ichimoku indicator lines may move throughout the day, which should be taken into account when determining trading signals. Don't forget to set Stop Loss orders to breakeven once the price moves 15 pips in the right direction. This helps protect against potential losses if the signal turns out to be false.
On Monday, there are absolutely no important events or releases scheduled in the Eurozone or the US. The only report worth mentioning is Germany's industrial production data, but all traders understand that its maximum impact might yield a reaction of just 20 pips.
Trading Recommendations:
On Monday, traders can look to trade from the area of 1.1657-1.1666 since the price has been hovering around this zone for several days. In the event of a bounce from this area, consider short positions with a target of 1.1620. If the price consolidates above this area, consider long positions with a target of 1.1750. It is also possible to capitalize on bounces from the critical Kijun-sen line.
Illustration Explanations:
- Price Levels (Support/Resistance): Thick red lines where movement may end. They are not sources of trading signals.
- Kijun-sen and Senkou Span B Lines: Indicates strong levels when applied to the hourly timeframe from the 4-hour timeframe.
- Extreme Levels: Thin red lines where the price has previously bounced. They serve as sources of trading signals.
- Yellow Lines: Trendlines, trend channels, and any other technical patterns.
- Indicator 1 on COT Charts: Represents the net position of each trader category.
