EUR/USD - 24H.
During the past week, the EUR/USD pair was trading more calmly than before. The US currency managed to rise by about 100 points as part of the corrective movement, which lasted all this week. However, to be honest, the movement down by 100 points does not even fall under the definition of "correction". It's just a sluggish pullback. Thus, the upward trend at the moment is maintained, respectively, even in the new year's week, the pair can resume growth. It is difficult to say how traders will behave next week. On the eve of the New Year, they may begin to close long positions, wanting to fix part of the profit. They may continue to trade in the usual mode, given the strength of the current upward trend. They may leave the market until next year, which will lead to low-volatility movements that we have already observed at the end of this week. In any case, now the bulls rule the ball and before fixing below the Kijun-sen line, it does not even make sense to talk (in the long term) about changing the trend to a downward one.
COT report.
During the last reporting week (December 8-14), the EUR/USD pair increased by 30 points. Recall that over the past few weeks, COT reports have shown an increase in the net position of non-profit traders. That is, the mood of professional players became more "bullish", although they were preparing for mass sales of the euro currency for several months. In the last reporting week, the Non-commercial group closed 5,200 buy contracts and opened 10,800 sell contracts. That is, the net position decreased by 16 thousand, which is quite a lot. That is, professional players are again looking in the direction of selling the euro currency. And if we take into account the long-term perspective, then non-commercial traders continue to lean towards selling the euro currency. The euro has been growing for a full nine months. All this time, it is extremely difficult for the dollar to even adjust. Therefore, the euro is now overbought. As for the indicators, they show the same decrease in the net position of non-commercial traders. The green line of the first indicator began to move again to meet the red line (net position of commercial traders), which is a signal of the end of the trend. Thus, we still expect the end of the euro's upward march, but at the same time, we remind you that until there are technical signals about the end of the upward trend, it is not recommended to trade down. The new COT report was supposed to be released on Friday, December 25, but due to the celebration of Christmas, it was postponed to Monday.
At the beginning of the week, the markets were shocked by information about a new strain of "coronavirus" in the UK, which is 70% more contagious than the "usual" COVID-2019. However, the next day, the markets calmed down, as they remembered that the usual "coronavirus" did not go anywhere and vaccination is just beginning. The situation was calmed down by representatives of pharmaceutical companies, who said that the vaccine is likely to work on a new strain. The second news of the week was Donald Trump's refusal to sign a new $ 900 billion stimulus package. However, this is not surprising, given Trump's desire to annoy the future president of the country Joe Biden, and his administration. Trump wants to appear to be a president who cares about the American people and said that the package of measures agreed by Congress is too small, and Americans deserve more "coronavirus" payments than $ 600. Recall that before the election, it was the Republicans led by Trump who refused a too large package of measures proposed by the Democrats, who at that time accused the Trump team of excessive greed and not wanting to help the American people and business. As you can see, the parties have changed places, which allows us to conclude simply about the political game. People in this game are the last to think about. Donald Trump has also pardoned a bunch of people recently, using his right as president, and blocked the defense budget.
Trading plan for the week of December 28-31:
1) The pair's quotes started a small pullback, however, the upward trend remains. Although the COT report and the fundamental background continue to signal a possible and very likely fall in the pair's quotes and the baselessness of the current growth, it persists. "Technique" now continues to signal an upward trend, thus, it is recommended to trade for an increase.
2) To be able to sell the EUR/USD pair, you need to at least wait for the price to consolidate below the Kijun-sen lines. However, we do not expect such a development in the coming days, as the volatility next week may be low. Thus, short positions can only be considered on lower timeframes if a downward trend is formed.
Explanation of the illustrations:
Price levels of support and resistance (resistance/support) – target levels when opening purchases or sales. You can place Take Profit levels near them.
Ichimoku indicators, Bollinger bands, MACD.
Support and resistance areas – areas from which the price has repeatedly bounced.
Indicator 1 on the COT charts – the net position size of each category of traders.
Indicator 2 on the COT charts – the net position size for the "Non-commercial" group.