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The EUR/USD pair fell again on Tuesday. However, this hardly surprises anyone. Despite the fact that in recent weeks the pair has been moving close to a flat or "swing", it still tends to fall and is close to its 20-year lows. And when the pair is trading near multi-year lows, then it cannot help but cling to them at least a bit. So it turns out that there is no pronounced downward trend (in the short term) now, but the pair is still updating its lows. Then the second breakthrough of the level of 0.9900 took place. It was not possible to consolidate below this level for a long time, however, we still have no doubt that the decline will continue. Only the European Central Bank, which will announce the results of its meeting this Thursday, can break this trend. An increase in the rate may for some time increase the demand for the euro. And yesterday, among the important macroeconomic data, we can only take note of the ISM index in the US, which reflected business activity in the service sector. The index rose again, although the similar S&P index continues to fall...
There were few trading signals on Tuesday, but traders could earn very well. The first sell signal turned out to be strong - the price bounced off the critical line, after which it went down at least 100 points and overcame the level of 0.9900 along the way. However, after that, it nevertheless returned to the area above this level, and at this moment it was necessary to close short positions. Profits amounted to at least 50 points. The signal to buy should not have been worked out, since it was formed rather late.
The Commitment of Traders (COT) reports on the euro in the last few months clearly reflect what is happening in the euro/dollar pair. For most of 2022, they showed an openly bullish mood of commercial players, but at the same time, the euro fell steadily at the same time. At this time, the situation is different, but it is NOT in favor of the euro. If earlier the mood was bullish, and the euro was falling, now the mood is bearish and... the euro is also falling. Therefore, for the time being, we do not see any grounds for the euro's growth, because the vast majority of factors remain against it. During the reporting week, the number of long positions for the non-commercial group decreased by 8,500, and the number of shorts decreased by 5,000. Accordingly, the net position decreased by about 3,500 contracts. This is not much, but this is again an increase in the bearish mood among the major players. After several weeks of weak growth, the decline in this indicator resumed. From our point of view, this fact very eloquently indicates that at this time even commercial traders still do not believe in the euro. The number of longs is lower than the number of shorts for non-commercial traders by 47,000. Therefore, we can state that not only does the demand for the US dollar remain high, but that the demand for the euro is also quite low. The fact that major players are in no hurry to buy the euro may lead to a new, even greater fall. The euro has not been able to show even a tangible correction over the past six months or a year, not to mention something more.
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The pair continues to be inside the 0.9900-1.0072 channel on the hourly timeframe, although it has already broken through its lower border twice. Formally, we have a "swing", but now this swing is already descending. We have no doubt that the euro will continue to fall, because the market does not react even to the very high probability of an ECB rate hike of 0.75% on Thursday. We highlight the following levels for trading on Wednesday - 0.9900, 1.0019, 1.0072, 1.0124, 1.0195, 1.0269, as well as Senkou Span B (0.9996) and Kijun-sen (0 .9973). There is still no level below 0.9900, so there is simply nothing to trade there. 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. The European Union will publish a report on GDP for the third quarter. From our point of view, this is an important report, but its potential value may not differ from the value of the second quarter and from the forecast value. In this case, the market will not react to it.
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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