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EUR/USD 5M
The EUR/USD pair was quite calm on April 21, and volatility was rather low once again. Thus, under such conditions, in principle, it was very difficult to expect a large number of trading signals. The pair continues to correct after gaining around 400 points in two weeks, but corrections are rarely rapid. And the fact that in two weeks the pair went up only 400 points (that is, 40 points a day) suggests that volatility has generally remained weak lately. And so it seems that this week is not the most successful in terms of trading the EUR/USD pair. There was an open flat in the Asian session, as usual. Subsequently, the downward movement that started the day before has then resumed with the beginning of the European session. However, no signals were formed, since the price did not reach a single extreme level. The 1.2028 support level, which was previously a resistance level, is not extreme, so we don't wait for signals to form around it. Afterwards, the pair fell to the critical line (1.2011) and began to trade openly sideways, going 5-6 points either above the Kijun-sen line, then below it. And so, there was neither a clear rebound, nor a clear breakthrough of the Kijun-sen line. Therefore, not a single deal opened on April 21. In addition, important macroeconomic reports were not published on this day as well, not a single fundamental event. Nothing at all. And so the bulls just took a short break. Most likely, the upward movement will recover.
EUR/USD 1H
You can clearly see on the hourly timeframe as to how the pair perfectly reached the 1.2073 level, and afterwards a correction began, which had been brewing for several days. Take note that the pair can move even in the absence of statistics or foundation. Thus, technical factors come first. The pound/dollar pair, for example, ignores macroeconomic data altogether, so now we need to build on global factors that we regularly analyze in fundamental reviews, as well as on the technical picture. We still recommend trading from important levels and lines that are indicated on the hourly timeframe. The nearest important levels are 1.1951, 1.1988 and 1.2081, as well as the Kijun-sen line (1.2011). 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. The European Union is set to summarize the results of the European Central Bank meeting, and we also have ECB President Christine Lagarde's press conference. We, of course, do not expect any important information or any changes in the parameters of monetary policy, however, we advise you to not miss this event. Certain information may still come in, and the markets may still react to this.
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 100 points during the last reporting week (April 6-12). Notably, professional traders have been actively reducing buy contracts (longs) and increasing sell contracts (shorts) for the past six weeks. The total number of buy contracts from the non-commercial group of traders remains twice as large as the number of sell contracts. This indicates bullish sentiment among non-commercial traders although it has been less strong in recent weeks. The new COT report showed minimal changes. During the reporting week, major players opened 2,200 buy contracts and closed 2,200 sell contracts. Thus, the net position slightly increased by 4,400. That is, the mood of the major players became more bullish. We said earlier that the Commitment of Traders (COT) report data suggested the end of the upward trend back in September 2020. However, from that moment, the upward trend continued, and it may resume now. This is happening due to the flood of liquidity into the US economy. So, what exactly do COT reports display? They reflect the actions of major players of the foreign exchange market, in particular, those players who make the majority of transactions on Forex. However, COT reports do not take into account such a factor as the inflation of the money supply. Here is a paradox: large players sell off the European currency, but it will still rise in price in the end, since the amount of US dollars in the economy and markets is growing. The logic behind it is as follows:the supply grows and the price falls. Therefore, during this year of pandemic, COT reports do not always accurately reflect the actual market situation. However, they clearly show how the sentiment of professional players is changing.
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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