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EUR/USD 15M
Both linear regression channels are directed to the downside on the 15-minute timeframe. Thus, the downward trend persists in the short term. Consequently, the EUR/USD pair will continue to strive for levels of 1.2026 and 1.1974. There are no prerequisites for the resumption of the upward trend yet. Nevertheless, the feeling remains that the current strengthening of the dollar is corrective.
EUR/USD 1H
The EUR/USD pair continued to trade quite calmly on the hourly timeframe on Monday, January 18. The downward trend remains, which is currently evidenced by the descending channel, and the pair has not made a single attempt to move away from it. And so the pair continues to decline and, accordingly, the dollar grows, which we have been waiting for. However, if the price settles above the downward trend channel, it could bring back the long-term upward again. In fact, it retreated to 2.5-year highs by only 300 points. This is a lot for a correction, but the point is that it is for a correction. Thus, we would not put an end to the upward trend regardless if the fundamental background is not in favor of the euro. After all, unknown factors pushed the pair up for more than nine months. During this trend, there were corrections of 300-400 points. What is the basis for concluding that the upward trend is over right now? Considering the fact that there is no strong fundamental background right now, and traders continue to ignore it anyway.
COT report
The EUR/USD pair fell by 100 points during the last reporting week (January 5-11). The pair has finally started a more or less tangible downward movement. However, professional market participants at this time closed contracts for selling the euro. But first things first. First of all, I would like to note that the "non-commercial" group of traders was not very active again during the reporting week. The number of contracts that were opened were less than the number of closed ones. Secondly, professional market participants closed Sell-contracts (shorts) and opened Buy-contracts (longs). There were 6,000 shorts that were closed, and 2,700 longs that were opened. Thus, the net position increased by 8,700 contracts, which is not so little. In other words, the mood of non-commercial traders (who are considered the engine of the market) has become more bullish. The euro began to fall at that moment. However, let's try to look at the situation as a whole. Non-commercial traders began to reduce their net position from the very beginning of September 2020. That is, it is preparing for the end of the upward trend. However, the trend has not ended. Maybe because the demand for the dollar during this time period was even lower than for the euro. One way or another, the euro continued to rise and major players were somewhat confused. They did not rush to buy the euro again since the upward trend was resumed. Net positions only started to slightly increase at the very end of November. All this suggests that the Non-commercial group is still waiting for the upward trend to end. We continue to remind you that any fundamental information or data from Commitment of Traders (COT) reports must be confirmed by technical signals.
No important publications or news from the European Union and the United States on Monday. Therefore, there were no sharp movements from the previous day. However, this may be a coincidence. There is quite a bit of macroeconomic news right now. Recent reports from overseas left much to be desired, but did not prevent the dollar from strengthening last week. The media is counting the number of hours left until the end of Donald Trump's presidential term, and Trump himself ends his presidency with record-low ratings. It is reported that more than half of respondents believe that Trump should have been removed from office because of the events of January 6. Trump's support rating is now at 34%. The disapproval rating of 62%.
There are also no major events scheduled for Tuesday. Thus, there might only be a slight change. If the current fall of the pair is purely corrective, then it will end in the near future. The point is not to miss this moment, which will help us with technical factors. As early as January 20, markets may be nervous about the inauguration of Joe Biden, as well as possible unrest in the United States. But it will be January 20, and so far we have the 19th.
We have two trading ideas for January 19:
1) Buyers continue to rest and wait for the bears to be full. Or you can put it another way: buyers continue to take profits on long positions. You can consider options for opening new longs when the price has settled above the descending channel. In this case, the targets will be resistance levels 1.2179 and 1.2228. Take Profit in this case can be up to 70 points.
2) Bears continue to hold the pair in their hands. Thus, short positions can be held open while aiming for support levels 1.2026 and 1.1974 until the start of correction (reversals of trend indicators to the upside, reversals of channels on the 15-minute timeframe directed to the upside). Take Profit in this case can be up to 100 points. You are advised to open new shorts in the event of a rebound from the upper channel line.
Forecast and trading signals for GBP/USD
Explanations for illustrations:
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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