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EUR/USD 5M
The EUR/USD pair traded weakly during the first trading day of the week, as it usually does lately. Monday's volatility was 50 points, which is more than 30 or 40 points, but still very small. Even macroeconomic reports from overseas and from the EU did not help that day. Business activity indices in various areas are not important indicators, but they can tell us what to expect from a particular economy in the near future. If we talk about the European Union, business activity declined in August, but still remained at fairly high levels. It's the same in the United States. Business activity indices declined, but still remained quite high. At least the current values of these reports do not allow us to conclude that the economies have begun to slow down. Now for the trading signals and how you should have traded on Monday. Unfortunately, the movement was far from ideal. If on Friday the price moved in one direction for most of the day and without corrections and therefore managed to work out this movement with a profit, then on Monday the pair was constantly correcting within the day. As a result, all trading signals were generated near the critical line. The very first sell signal turned out to be very imprecise and indistinct. Nevertheless, it could be worked out, but the price could not go down after its formation and 10 points, returned to the Kijun-sen line and bounced again. The pair managed to overcome this line only on the third attempt, which was a signal to cancel the short position. We received 10 points worth of loss. But all subsequent signals should not have been processed any more, since at that moment already two signals from the critical line turned out to be false.
Overview of the EUR/USD pair. 24 August. The Jackson Hall symposium could decide the fate of the pair in the coming weeks
Overview of the GBP/USD pair. 24 August. The British pound is set to rise. Only the Jackson Hall symposium can prevent this
EUR/USD 1H
The upward movement is also clearly visible on the hourly timeframe after the quotes have left the downward channel. Thus, at this time, the trend is characterized as an upward trend, and the price has overcome the Kijun-sen and Senkou Span B lines, therefore, the prospects for the euro/dollar pair's further growth are significantly improving. Recall that we have long been waiting for the pair to rise, but the pair has been correcting against the global upward trend on the 24-hour timeframe for more than six months. Perhaps, a new approach to the level of 1.2240 is being made. However, the markets may well resume buying the dollar, if the US central bank or Fed Chairman Jerome Powell personally makes it clear to the markets that they are ready to start curtailing stimulus in the near future. From our point of view, this factor has already been worked out with interest, but the markets may think otherwise. On Tuesday, we continue to recommend considering trading from important levels and lines. The nearest important levels at this time are 1.1704, 1.1744, 1.1805, 1.1852, as well as the Senkou Span B (1.1735) and Kijun-sen (1.1724) lines. The Ichimoku indicator lines can change their position during the day, which should be taken into account when looking for trading signals. 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. The calendars of macroeconomic events in the United States and the European Union are completely empty on August 24. Thus, volatility is unlikely to rise on Tuesday. But traders will have a good opportunity to continue pulling the pair away from the 17th level, which we see as critical for maintaining the prospects for an upward trend.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair increased by 40 points during the last reporting week (August 10-16). Since the European currency has generally been falling in recent weeks, it is not surprising that the Commitment of Traders (COT) report showed that the bullish sentiment has weakened among professional traders. This is clearly seen on the first indicator, which has been showing a weakening of bullish sentiment since February. The green and red lines are narrowing, indicating the end of the upward trend. However, the upward trend itself cannot be considered complete yet, and the latest COT report allowed the green line (the net position of the "non-commercial" group of traders) to start increasing. This means that the bullish mood among the major players is strengthening again, so it is possible that a new upward trend will start in the near future. The second indicator also signals an increase in the net position. It clearly shows that the volume has grown, and accordingly the likelihood of a new appreciation of the euro is increasing. Professional traders opened 21,600 buy contracts (longs) and closed 4,400 sell contracts (shorts) during the reporting week. Thus, the net position grew by 26,000 at once, which is a lot even for the euro currency. However, as we can see, in the next few days the euro resumed its decline, so the new COT report may already show a decrease in the net position. In any case, as the bullish sentiment persists, as the total number of open contracts for buying from non-commercial exceeds the total number of contracts for selling. Therefore, we continue to expect the upward trend to resume.
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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