EUR/USD 5M
The EUR/USD pair is still with the same upward bias on Wednesday as it was on the first two trading days of the week. No interesting movements during the Asian session, as usual. And with the opening of Europe, the bulls began to shake the market in their favor again. Take note that over the last three trading days, the European currency failed to correct normally. This indicates a rather strong bullish mood in the foreign exchange market, but at the same time, the upward movement on such a small timeframe cannot continue forever. Thus, a downward pullback should begin by today or at most tomorrow. Yesterday, traders immediately reached the extreme level of 1.1882, and even twice, each time forming a perfect rebound from it. However, the bears did not seize the initiative at these moments, so both rebounds turned out to be false. The pair did not go down 20 points either for the first or the second time, so it was not possible to set Stop Loss to breakeven either. Therefore, short positions should be closed after the quote surpassed the 1.1882 level, and it brought traders up to 10 points of loss. On the other hand, settling above the 1.1882 level could be interpreted as a buy signal. However, this time the bulls were not able to immediately build on the success, and the price dropped back to the 1.1882 level. This time, it did not settle below this level, so it was necessary to stay in long positions. As a result, the upward movement continued and the 1.1911 target level was finally reached. As a result, this long-suffering trade brought about 24 points in profit, covering the morning losses. The volatility of the day was very low, only about 50 points, so it was very problematic to earn more in any case. Take note that only one more or less significant report was published during the day - the index of business activity in the services sector of the eurozone - but it had no effect on the course of trading. It is marked with the number "1" on the chart. Although the price reversed down at this time point, the reason for this was the rebound from the 1.1882 level, and not the report on the business activity. And the most important thing is that yesterday we said that a rebound from the 1.1911 level is quite possible, so it was possible to sell the pair from it with targets like 1.1882 and 1.1836.
EUR/USD 1H
We see that the EUR/USD pair surpassed the 1.1882 level on the hourly timeframe quite easily on Wednesday and reached the 1.1911 level, from which it immediately rebounded. We believe that now a noticeable downward correction will begin, since the price went up 210 points for the first three working days of the week, despite the fact that there was no corresponding foundation or reports at all. We have already said earlier that, in principle, the option with forming a new long-term trend for the euro is what we expect in the coming months. But not as fast! Thus, we are waiting for the resumption of the upward movement after the downward correction. To date, the European Union is scheduled for the European Central Bank's monetary policy report from the last meeting, and in America we have a report on claims for unemployment benefits and Federal Reserve Chairman Jerome Powell's speech in the evening. We believe that only Powell's speech can cause any market reaction. In general, we still recommend trading from important levels and lines that are plotted on the hourly timeframe. The nearest important levels are 1.1882 and 1.1911. Signals can be rebounds and once levels and lines are surpassed. 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. There is no upward trend line yet, so you can trade in both directions. Yesterday's final trade was to sell from the 1.1911 level. You can keep it until the required profit is obtained or until Stop Loss is triggered at breakeven.
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 fell by 170 points during the last reporting week (March 23-29). This is already quite a significant drop and we have been recording it for several consecutive weeks. The new Commitment of Traders (COT) report was quite eloquent. A group of non-commercial traders opened 25,000 contracts for shorts and 34 contracts for longs during the reporting week. This means that the net position has decreased by another 25,000, and the bullish mood of the major players continues to weaken. At the moment, the total number of Buy-contracts (longs) that professional players opened is at 195,500, and Sell-contracts (shorts) at 136,000. Although as early as January 5, 2021, that is, three months ago, the numbers were as follows: 226,000 - 82,000. That is, in the three months of the new year, non-commercial traders have increased more than 50,000 contracts for the sale and closed about 30,0000 contracts for the purchase. As the trend changed into a downward trend. According to COT reports, we expected the trend to end last September. The chart clearly shows why. The red and green lines of the first indicator moved away from each other as much as possible in September 2020, which were the harbingers of a trend reversal. However, the dollar's depreciation due to the exorbitant trillions of dollars that was poured into the American economy caused a new rise in the euro, which is again clearly seen in the chart. The net position of non-commercial traders (the second indicator) has been falling since the same September-2020, while the euro's quotes continued to grow at the same time, and these two facts contradict each other. Thus, both the technique in global terms and the COT report are now in favor of continuing the downward movement. The key level is 1.1691.
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.