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EUR/USD 5M
The volatility for the EUR/USD pair sharply increased and reached 70 points on Thursday. This is not the highest value, but it is already much closer to "normal". Along with the growth of volatility, the number of trading signals immediately increased, and most importantly, profitable and strong trading signals. There were few macroeconomic statistics today and, in fact, had no effect on the pair's movement. The only report of the day - retail sales in the US - turned out to be higher than forecasted, but by the time this report was published, the pair had already gone almost all its way down (figure "2" in the chart). European Central Bank President Christine Lagarde was also scheduled to speak (figure "1" in the chart), but after that there was no particular market reaction either. Let's move on to trading signals. The first signal was formed at the opening of the European trading session. The price settled below the Kijun-sen line, so traders had to open short positions. Subsequently, the price overcame the extremum level of 1.1797, the support level of 1.1779 and perfectly worked out the extremum level of 1.1750 in terms of accuracy. A rebound from this level was a signal to close short positions and open long positions. Thus, it was possible to get a profit of 45 points on the short position. After opening a long position, the movement was already significantly weakened, so it was not possible to reach the nearest target level. Nevertheless, traders could have made a profit of 5-10 points on this trade as well. As a result, as soon as volatility increased, tangible profits were immediately obtained.
Overview of the EUR/USD pair. September 17. The dollar went up unexpectedly. Did the markets believe in the removal of incentives?
EUR/USD 1H
On the hourly timeframe, you can see that the downward trend remains in effect despite the fact that the price crossed the downward trend line several times, which was also rebuilt. Thus, the downward trend is now indistinct, and yesterday's downward movement looks very strange, since it was not triggered by any specific event. Nevertheless, the increase in volatility is very good. Since the level of 1.1750 could not be overcome, further downward movement is still in question. On Friday, we continue to draw the attention of traders to important levels and lines - 1.1666, 1.1704, 1.1750, 1.1805, 1.1857, as well as the Senkou Span B (1.1851) and Kijun-sen (1 , 1800). The Ichimoku indicator lines can change their position 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 points in the right direction. This will protect you against possible losses if the signal turns out to be false. The US Consumer Sentiment Index from the University of Michigan will be published on September 17. If the value of this index does not differ by 5 or more points from the forecast, then the market reaction to it should not be expected. In addition, a report on inflation in the European Union will also be released. However, this is the second, final estimate for August, so traders are already mentally prepared for 3.0% y/y. It is even more unlikely that there will be a reaction to this report. Today we will see if yesterday's increase in volatility was an accident?
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair increased by 75 points during the last reporting week (August 31 - September 6). But the Commitment of Traders (COT) reports, which for several months in a row signaled a decrease in the net position of non-commercial traders, just before level 0 (the first indicator) stopped selling the European currency. That is, at this time the number of open long and short positions in the "non-commercial" group is practically the same, which indicates the neutral mood of this group. Formally, it remains bullish, since a slightly larger number of buy contracts (longs) are still concentrated in the hands of large players, but this advantage is small. Thus, the COT reports do not currently answer the most important questions. Namely: will the bears be able to overcome the 1.1700 level to try to form a downward trend? Are the bulls ready to start forming a new upward trend? During the reporting week, professional traders closed less than a thousand Buy contracts (longs) and 16.5 thousand Sell contracts (shorts). Thus, the net position grew by 15,000 at once, and the mood became a little more bullish. However, one should not forget about the Fed factor as well. Let us remind you that if money injections into the American economy continue, this will further lead to an increase in the money supply and to natural inflation of the dollar. That is, no matter how the players get rid of the European currency, if the Federal Reserve continues to print $120 billion a month, this will not lead to a strong dollar growth and, rather, vice versa. Take note that the stock market is growing rapidly at this time. This means that most of the money that came into the economy from the Fed flows into the stock market. If investors stop buying shares, this could lead to an excess of free money supply, which will provoke a new fall in the dollar.
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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