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EUR/USD 1H
The EUR/USD pair was trading quite volatile again on the hourly timeframe on Thursday, November 5. The US dollar continued to depreciate. Buyers brought quotes above the resistance level of 1.1791, breaking the Kijun-sen and Senkou Span B lines along the way. Therefore, there are prospects for further growth for the EUR/USD pair, towards the resistance area of 1.1886-1.1912. However, take note that current market conditions are not entirely normal. High volatility is associated with the strongest fundamental background. This fundamental background can change, it can intensify, and the reaction of traders to it is unpredictable. Thus, you are advised to trade with extreme caution.
EUR/USD 15M
The linear regression channels are directed to the upside on the 15-minute timeframe, which reflects the nature of the movement on the hourly chart during the past day. However, a downward reversal may follow and quotes could fall in the near future.
COT report
The EUR/USD pair rose quite a bit during the last reporting week (October 20-26). Therefore, we can conclude that professional market participants did not make any extremely large purchases and sales of the European currency. However, the new Commitment of Traders (COT) report showed that non-commercial traders were actively closing Buy-contracts (longs) during the reporting week. In total, 12,000 of them were closed. But professional traders were in no hurry to get rid of Sell-contracts (shorts), having closed only 1,000. Thus, the net position of this group of traders decreased by 11,000 contracts at once. It is possible that the main closing of the Buy-contracts took place at the end of the reporting week, because in the following days a more tangible drop in euro's quotes began. Within its framework, the euro/dollar pair lost about 160 points. We remind you that if the net position decreases, it means that the traders' sentiment becomes more bearish. Thus, so far, our forecast is coming true. In the analysis of previous COT reports, we said that the high around the 1.2000 level could remain as the peak for the entire upward trend. The first indicator and its green line clearly show that non-commercial traders have been cutting back on long deals on the euro for two months now. And non-commercial traders are the most important group of large traders in the foreign exchange market. It is believed that it is the one responsible for driving the market.
The European Union released its September retail sales figure on Thursday. It turned out to be worse than the forecast values, however, the euro continued to rise during the day, regardless of European data. Meanwhile, a report on applications for unemployment benefits was released in the United States, which turned out to be slightly worse than forecasts, but was also ignored by market participants. There has been no global news in the European Union in recent days, and the coronavirus epidemic, as we see, does not hinder the euro's growth too much. The US elections is still the key topic in the foreign exchange. And it seems that it is pulling down the dollar (against the pound too). General uncertainty remains, and both Trump and Biden have a chance of winning. But this is not what makes traders get rid of the US dollar. The fact that a litigation between Democrats and Republicans will begin immediately after the final results are announced, makes us talk about a constitutional crisis. And a new potential confrontation between Trump and Biden significantly lowers the chances of reaching an agreement on a new stimulus package for the US economy in the near future.
We have two trading ideas for November 6:
1) The EUR/USD pair managed to maintain an upward trend yesterday. And so, buyers are advised to trade upward while aiming for the resistance area of 1.1886-1.1912, if the price manages to stay above the 1.1791 level. Take Profit in this case can be up to 80 points. Take note that sharp price reversals and high volatility are still possible today.
2) Bears still do not have the initiative in the market. Thus, sellers are advised to return to trading down while aiming for the 1.1692-1.1699 and 1.1612-1.1624 area, if the price settles below the Kijun-sen line (1.1730). Take Profit in this case can range from 20 to 90 points. The fundamental background is not on the side of the US dollar righ now.
Hot 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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