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Yesterday, the EUR/USD pair failed to continue the upward movement that began on Wednesday evening. Recall that in previous articles we deliberately did not consider the movements that occurred after the announcement of the Federal Reserve's results and Jerome Powell's speech, since traders also had to have the opportunity to work it out during the European trading session. If on Wednesday evening the US dollar fell absolutely illogically, then throughout Thursday it grew in a logical manner. Considering the fact that there wasn't a single report published either in America or in the European Union yesterday, and in general there wasn't any interesting event regarding the euro/dollar pair, such a strong downward movement could only be associated with the Fed meeting . As a result, it was possible to draw conclusions. The rate was raised by 0.5%, at the next two meetings it can be increased by another 1%, and from June the Fed starts the QT program. All these are hawkish decisions that should have provoked the dollar's growth in the end.
As for trading signals, there were only two of them on Thursday. First, the pair overcame the area from the critical line and the level of 1.0579, and then rebounded from the critical line from below. Both sell signals should have opened short positions. Until the evening, the price failed to reach the nearest target level of 1.0471, so the deal had to be closed manually. Profit on it amounted to 40-50 points. Not a lot, but not a little either.
The latest Commitment of Traders (COT) reports on the euro raised more questions than they answered! Major players, starting from January 2022, maintain a bullish mood, and the euro currency, starting from January 2022, maintains a downward trend. During this time, it has already fallen in price by almost 10 cents, however, all this time the mood remained bullish. During the reporting week, the number of long positions increased by 2,000, while the number of shorts in the non-commercial group increased by 11,000. Thus, the net position decreased by 9,000 contracts. This means that the bullish sentiment has eased, but it is still bullish, as the number of long positions now exceeds the number of short positions held by non-commercial traders by 22,000. Accordingly, the paradox remains and it lies in the fact that professional players generally buy more euros than they sell, while the euro continues to fall almost non-stop, which is clearly seen in the chart above. We explained earlier that this effect is achieved by higher demand for the US dollar (there are simply no other options). The demand for the dollar is higher than the demand for the euro, so the dollar is growing in tandem with the euro. Therefore, the data of COT reports on the euro now does not make it possible to predict the further movement of the pair. The longer the phase of active hostilities in Ukraine lasts, the higher the likelihood of serious consequences of the food and energy crises for the European Union, and the dollar may continue to grow due to its status as a "reserve" currency and the stability of the American economy.
Overview of the EUR/USD pair. May 6. Summing up the results of the Fed meeting and analyzing the market reaction.
Overview of the GBP/USD pair. May 6. Andrew Bailey: Inflation is now a big headache for the whole world.
Forecast and trading signals for GBP/USD on May 6. Detailed analysis of the movement of the pair and trading transactions.
On the hourly timeframe, it is clearly visible that the pair has been desperately trying to correct in recent weeks. And even when an impressive growth began on Wednesday evening, as a result, the price very quickly returned to its original positions, and then to its 5-year lows. Thus, the correction failed again, a rather strong level of 1.0637 kept the bulls from long positions. Accordingly, the downward trend continues, we expect a new fall in the euro/dollar pair. On Friday, we highlight the following levels for trading - 1.0340-1.0369, 1.0471, 1.0579, 1.0637, 1.0729, as well as Senkou Span B (1.0703) and Kijun-sen (1 .0566). Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. There are also secondary support and resistance levels, but no signals are formed near them. Signals can be "rebounds" and "breakthrough" extreme levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price has gone in the right direction for 15 points. This will protect you against possible losses if the signal turns out to be false. No important events or reports scheduled for May 6 in the European Union. Buttoday the NonFarm Payrolls report will be published in the US, as well as a slightly less significant unemployment rate and changes in average wages. Volatility during the last trading day of the week may be high again.
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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