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EUR/USD 5M
The EUR/USD pair traded quite calmly at first last Friday. It was hard to believe that the pair had made an impressive somersault down the day before. The price generally stood in one place during the European trading session, which can clearly be seen. However, if on Thursday, traders have worked with a vengeance on statistics from overseas, then on Friday they completely ignored the reports from the European Union. Retail sales in April fell by 3.1% on a monthly basis, which is much worse than predicted values (figure "1" in the chart). Not that this is the most important report, but there was no reaction at all, even a bit. The speeches of Christine Lagarde and Jerome Powell (number "2" in the chart) were both of passing, but at least there is an explanation here: neither the head of the European Central Bank, nor the head of the Federal Reserve provided any important and interesting information to the markets. But after lunch, a real rally began. And only thanks to one single NonFarm Payrolls report (number "3" in the chard). Moreover, in addition to payrolls, there were also data on the unemployment rate and average wages in America, which turned out to be much better than the forecasts and expectations of the markets. However, traders did not pay any attention to this report, but they were very disappointed with 559,000 new jobs created outside the agricultural sector instead of 645,000 forecasted. In truth, the Nonfarm report was not that bad. The market's overstated expectations simply played a cruel joke on the dollar. The ADP report from last Thursday showed an increase in the number of workers in the private sector by almost 1 million, so, probably, the same figure was expected from Nonfarms. As a result, the US currency collapsed on Friday by about the same amount as it rose on Thursday. As for trading signals on the 5-minute timeframe, there were none. There was an open flat during the European session, and at the US session, the price jumped up with such force and speed that hardly anyone could have time to react to this. And in any case, one should not have entered the market when such important reports are released. It also did not make sense for us to work out the signal to buy in order to surpass the level of 1.2160, since the upward movement had already ended by that time.
Overview of the EUR/USD pair. June 7. The ECB and Fed will begin to phase out their stimulus programs no earlier than 2022.
Overview of the GBP/USD pair. June 7. China and the United States are in conflict again.
EUR/USD 1H
The euro/dollar pair returned to the critical line on the hourly timeframe, as well as to the downward trend line, which was literally just built. Nevertheless, we have a rebound from the Kijun-sen line and a rebound from the trend line, which allows us to count on a new round of downward movement on Monday-Tuesday. Otherwise, overcoming both of these obstacles will signal, on the contrary, a resumption of the upward movement. Although even taking into account the movements on Thursday-Friday, everything looks more like a kind of flat. On Monday, we still recommend trading from important levels and lines that are indicated on the hourly timeframe. The closest important levels at this time are 1.2051, 1.2104, 1.2160 and 1.2213, as well as the Senkou Span B (1.2199) and Kijun-sen (1.2180) lines. The Ichimoku indicator lines can move during the day, which should be taken into account when looking for trading signals. Signals can be rebounds or breakthroughs of these levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price moves 15-20 points in the right direction. This will protect you against possible losses if the signal turns out to be false. Neither the European Union nor the United States have any important reports scheduled for Monday. So today you will have to trade using pure technique. From our point of view, the US dollar will not be able to continue its growth, so we are waiting for the trend line to be overcome.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair fell by 25 points during the last reporting week (May 25-31). The new Commitment of Traders (COT) reports showed that professional traders continue to build up buy positions in the European currency. This time they opened only 751 new Buy contracts, but closed 3,900 Sell contracts. Thus, the net position for this group of traders increased again, by 4,600. The bullish mood of professional traders is getting stronger, which can be clearly seen from the second indicator in the chart above, which reflects the changes in the net position for the "non-commercial" group. We see that this indicator has been constantly growing since mid-April, increasing the likelihood of further strengthening of the European currency. We have already said that the actions of the Fed and the US Congress are now simply blocking the actions of players in the foreign exchange market. Simply because professional traders make deals in both directions, and the Fed and the US authorities are constantly pouring new hundreds of billions of dollars into the economy. Therefore, the dollar is declining, despite the actions of the participants in the foreign exchange market. It seems that in recent months, players realized what they would have to work with in 2021, and simply followed the trend, not wanting to compete with the Fed. As a result, in early April, judging by the first indicator, a new round of the upward trend began.
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.
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