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EUR/USD 5M
The EUR/USD pair traded in a very limited range for most of the day on Wednesday. The overall volatility of the day, excluding the evening movement, amounted to 48 points. Thus, our assumption continues to come true that the pair spends 3 out of 5 trading days with low volatility. Is it worth it to say once again that when a pair passes 40-50 points in a day, it is extremely difficult to make money on such a movement? In part, such a movement is now observed due to the complete absence of macroeconomic reports, important fundamental events and other topics that could have at least a background effect on the pair. We deliberately do not consider the movements that took place late in the evening, when information from the Federal Reserve began to flow to the markets. By then, all trades should have been closed for two reasons. First, during the announcement of the results of the Fed meeting and Fed Chairman Jerome Powell's speech, trading is generally not recommended, since there is a high probability of movement in different directions. Secondly, according to our recommendations, we do not recommend trading in the evening or at night, since the movement at this time of the day usually significantly differs from the daytime. Thus, the EUR/USD pair remains almost in full flat. Yesterday, however, several trading signals were generated. Let's break them down and see what the results were. The first sell signal was formed early in the morning and turned out to be false, since the price could not go down even 17 points to the nearest target - the Kijun-sen line. A loss of about 10 points was received on the short position. Then a buy signal was formed, as the price settled above the Senkou Span B line, but it turned out to be false, as the upward movement did not continue either. Strictly speaking, in a flat, the Kijun-sen and Senkou Span B lines are weak, but sometimes you can trade using them. On the second trade, a loss of about 10 points was also received. It no longer made sense to consider the subsequent signals. The third signal was formed near the same Senkou Span B line, near which two false signals had already been formed at that time. The fourth signal is near the Kijun-sen line, but by that time it was already clear that the markets were not going to move and were waiting for the Fed meeting.
Overview of the EUR/USD pair. July 29. Whatever the final market reaction to the Fed meeting, the dollar is still at risk.
Overview of the GBP/USD pair. July 29. The stumbling block is the Northern Ireland Protocol.
EUR/USD 1H
The downward trend for the euro/dollar pair was canceled on the hourly timeframe, and a rising trend line formed instead, which is rather weak, like all the movements of the last weeks. In any case, it will be better to analyze the hourly timeframe when the markets fully work out the information received from Powell and the Fed. Only after that will it be possible to talk about any trend. On Thursday, we still recommend trading from important levels and lines. The nearest important levels at this time are 1.1704, 1.1756 and 1.1881, as well as the Senkou Span B (1.1813) and Kijun-sen (1.1798) lines. The Ichimoku indicator lines can move during the day, which should be taken into account when looking for trading signals. It should also be borne in mind that in the flat the Kijun-sen and Senkou Span B lines are weak. 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. On Thursday, the European Union will publish a report on the monetary policy of the European Central Bank, but this document never causes any reaction from the markets. The United States will release an important report on US GDP for the second quarter, which can and should affect the dollar's rate. In addition, another minor report on applications for unemployment benefits will be published.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair fell by 60 points during the last reporting week (July 13-19). In recent weeks, major players have continued to reduce the number of Buy contracts (longs) and increase sell contracts (shorts). This is clearly seen in the first indicator. The green line (net position of the "non-commercial" group) continues to decline, while the red line (net position of the "commercial" group) continues to grow. Recall that when these two lines move towards each other, it means that the current trend is coming to an end or has already ended. However, we have already repeatedly drawn your attention to the fact that the global injection of cash into the US economy continues, as the Federal Reserve has repeatedly stated. Thus, a rather paradoxical situation turns out: professional traders are selling the euro, but at the same time it is getting very weak and has excellent chances of resuming the upward trend. This is because the money supply in the United States continues to increase and the dollar is now also depreciating due to high inflation and high supply in the foreign exchange market. It turns out to be a situation in which the euro is getting cheaper mostly due to the fact that players are selling it, and the dollar is getting cheaper because of the actions of the Fed and the US government. Consequently, as a result, that currency falls, the rate of reduction in price of which is higher. So far, this is the euro currency. But its decline is very weak. During the reporting week, non-commercial traders opened another 7,000 contracts to sell and closed 5,600 contracts to buy. Thus, their net position decreased by another 12.6 thousand contracts, and the mood became even less bullish. The total number of buy contracts from the non-commercial group is already 210 thousand, and for sale - 162 thousand. More recently, the gap was twofold.
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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