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EUR/USD 5M
The EUR/USD pair traded much better on May 6 than on the last two days. We remind you that globally, we either saw a new upward trend or the renewal of the old one last month, which took most of 2020. The pair corrected against it in January-March, and probably resumed in April. Therefore, in general, the trend is upward, if we take into account the most higher timeframes. Thus, after a weekly drop in quotes as part of the correction against a new round of the upward trend, the resumption of the growth in the euro's quotes was expected. Of course, there was no special news or reports in either the European Union or the United States on Thursday, it was quite unexpected to observe the pair rising by 80 points during the day. However, strong movements do not always coincide with strong macroeconomics or foundation. A standing signal during the day was formed on the 5-minute timeframe, unfortunately, there was only one. And was very dubious at that. First, it was formed exactly at the opening of the European trading session, so traders could simply miss it. Secondly, it formed when the pair crossed 1.2003, which we removed from the list of strong levels yesterday, as the price passed it several times quite easily during the previous days. Therefore, formally, you could have opened positions on this signal. They would bring about 45 points in profit. But if traders missed it, then this is also quite normal. But during the US session, trading signals were scattered and had formed near the Kijun-sen and Senkou Span B lines. Moreover, they were all very inaccurate. Fortunately, European Central Bank President Christine Lagarde was scheduled to speak in the European Union around this time, so it was probably better not to enter the market at all at the beginning of the US session. The US also published a report on applications for unemployment benefits around the same time, which turned out to be better than the forecast values. In any case, by the first two rebounds from the Kijun-sen line, we could understand that the signals were false and there was no need to trade further from this line. The Senkou Span B line was located too close to the Kijun-sen line, so there was no need to trade up from the critical line at all. The only thing that could be done was to open short positions on a rebound from the Senkou Span B line, since this line is still stronger than the Kijun-sen. However, this signal was also not at all obvious.
EUR/USD 1H
You can clearly see a rather strong movement on the hourly timeframe during the day, which ended near the Senkou Span B line. Formally, the upward trend persists, since both trend lines remain relevant. However, the bulls need to overcome the Senkou Span B line in order to expect the upward movement to continue. We probably won't encounter problems with this, since the global fundamentals, which we regularly talk about in our fundamental articles, are still not on the side of the US dollar. In general, we still recommend trading from important levels and lines that are indicated on the hourly timeframe. The closest important levels at this time are 1.1988 and 1.2076, as well as the Kijun-sen (1.2043) and Senkou Span B (1.2072) lines. 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 15-20 points in the right direction. This will protect you against possible losses if the signal turns out to be false. On Friday, the European Union is scheduled for a new speech by ECB President Christine Lagarde, and in the States - reports on NonFarm Payrolls, unemployment and wages. The US statistics package is potentially very important and could provoke a strong market reaction.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
Recall that the EUR/USD pair increased by 50 points during the last reporting week (April 20-26). Take note that major players have been strenuously reducing buy contracts (longs) and opening sell contracts (shorts) since February. However, in the last couple of weeks, there has been an increase in bullish sentiment among the group of non-commercial traders. Let us recall that this is the most important group of traders, which usually determines the trading vector. Professional players opened 5,500 buy contracts and 2,900 sell contracts during the reporting week. Thus, the net position increased by 2,600 contracts. This is not much for the euro. In general, the number of buy contracts remains much higher than that of sell contracts: 202,000 versus 121,000.
Therefore, in general, we can conclude that the upward mood persists among traders and has even slightly strengthened. We also remind you about the factor regarding the injection of trillions of dollars into the American economy, which also affects the dollar exchange rate in the international currency market. Let us remind you that even if the major players sell billions of euros, but at the same time the Federal Reserve prints trillions of dollars, the euro will still go up in price. The Commitment of Traders (COT) reports reflect the actions of major players in the European currency, but do not reflect the actions of the Fed against the dollar. Given the fact that the US government will continue to develop more and more stimulus packages for the economy, we believe that the economy continues to remain in a "post-crisis state", when it is impossible to do without cash injections and incentives. This means that these infusions are in the first place in terms of the degree of influence, and not the actions of large players.
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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