EUR/USD 1H
The euro/dollar pair continued to trade between the extreme levels of 1.2111 and 1.2145 on the hourly timeframe on February 15. The price has been between these levels for several days and only went beyond them once. However, despite the fact that everything looks very much like a weak volatile flat, an upward trend line indicates an upward trend that is present. This means that the upward movement can resume at any time. The dollar is not in demand among traders again, although no blatant negative from the US has been reported recently. However, we remind you that on the highest timeframe, the 24-hour one, a buy signal was generated in the form of a rebound from the Senkou Span B line and the 50.0% Fibonacci level. Thus, we assumed that the pair was correcting in January, and after the correction, therefore, the upward movement should be resumed. Therefore, now the price may even try to go below the trend line, but the long-term trend will still remain upward. In our last review, we advised you to trade bullish if the price settles above the 1.2139 level (now this level is no longer relevant) or in the event of a price rebound from the Senkou Span B line. However, no such signals were generated. You were advised to sell the pair when the price settled below the 1.2111 level, and there was no such signal either last Friday or this Monday.
EUR/USD 15M
Both linear regression channels are directed to the upside on the 15-minute timeframe, but their slope angle is such that the movement is more suited to the concept of a flat than a trend. You can clearly see that the pair tried to overcome the 1.2145 level twice, but failed to do so. Volatility is low now, the movement really looks more like a flat.
COT report
The EUR/USD pair fell by 10 points during the last reporting week (February 2-8). The movement, of course, was more volatile during the five working days, however, price changes, as we can see, are minimal. At the same time, the group of "non-commercial" traders opened 4,700 buy contracts (longs) and closed 2,600 sell contracts (shorts). Thus, they became more bullish, and the net position increased by 7,300 contracts. Of course, a week earlier the Commitment of Traders (COT) report showed much larger changes. A week earlier, professional traders massively closed buy contracts for the euro. However, the downward trend did not end there. We have already insisted on a correctional option in the long term several times. According to this scenario, the pair has corrected to the downside enough and currently has excellent chances for a new upward trend. The data of the COT report from a week ago questioned this option, but, as we can see, the latest COT report shows rising bullish sentiments among major market players. The indicators also eloquently show that the overall sentiment remains bullish in the market. The green and red lines of the first indicator, which represent the net positions of the non-commercial and commercial groups, began to narrow again a week ago, but are still far from each other. In the long term, based solely on the COT reports, we can say that the end of the upward trend has been brewing for a long time. But what if the demand for the US dollar remains non-existent?
President's Day was celebrated in America on Monday, so it is logical that we did not receive any reports and that generally, nothing interesting happened overseas. A report on industrial production for December was published in the European Union, which turned out to be significantly worse than the forecast values. However, this report did not provoke a particularly strong fall in the euro even within the horizontal channel. In general, trading was very calm yesterday without a clear direction of price movement.
The European Union will publish its GDP for the fourth quarter, which is forecast to contract by 0.7% in quarterly terms. However, Britain's GDP was also expected to fall, and instead it rose by 1%. Therefore, we will not draw conclusions ahead of time. Negative GDP could put pressure on the euro, unless traders ignore the reports, as always. In addition, the index of sentiment in the business environment of the ZEW Institute will be published today. A reading above 59.2 could help the European currency.
We have two trading ideas for February 16:
1) Buyers continue to hold the market in their hands, but cannot overcome the 1.2145 level. Thus, we recommend buying the pair if the price settles above this level with the targets at 1.2173 and 1.2190. Take Profit in these cases can be up to 40 points. However, one should also take the low volatility and flat into account, in which the pair has been trading during the past few days.
2) Bears were unable to resume the pair's downward movement. Thus, short positions have lost their relevance right now. We recommend going back to trading bearish if the price breaks the trend line with the target at the 1.2058 level. Take Profit in this case can be up to 45 points.
Forecast and trading signals for GBP/USD
Explanations for illustrations:
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.