EUR/USD on 5M
On April 16, the euro/dollar was trading cautiously with minimal volatility. This is confirmed by two linear regression channels, which are very narrow and are pointing sideways. The pair failed to overcome the extremum level of 1.1988 on Friday. Just like on Thursday, the pair made three attempts to break through this level, and all of them failed. It was quite difficult to distinguish the signals on Friday. However, the level of 1.1988 had been tested three times. Since this was an extremum level, three sell signals were formed near it. Each time, the pair went down by no more than 13 pips, so there was no need to set a Stop Loss to breakeven. Therefore, this trade could have been closed manually at any time. But this was relevant for only one position since consolidation above 1.1988 did not take place. It is obvious that we shouldn't have followed the third and the second signal to open short positions as the first trade was not even canceled due to low volatility. So, from this deal, traders could earn + -10 pips at most. During the day, the EU published a report on inflation which did not cause any reaction in the market. On the chart, this moment is marked with 1. As you can see, nothing has changed after its release. Inflation in the EU accelerated slightly in March, but this data was of no interest to traders.
EUR/USD on 1H
On the hourly time frame, the situation is even more boring. The pair spent three days near the level of 1.1988 and could not break through it. It also did not start a downward correction. Basically, there were only several short pullbacks of 40 pips. As a result, at the moment the quotes are stuck in the flat channel between 1.1951 and 1.1988. At the same time, the upward trend continues, which is confirmed by two ascending trendlines. Thus, a further upside movement is highly likely. In our fundamental reviews we always mention that we expect the pair to continue its grow in 2021. So far, everything is going according to our forecast. No important fundamental and macroeconomic events are scheduled for Monday in the EU and the US. Thus, volatility may remain low. We still recommend trading from important levels and lines that are indicated on the hourly time frame. The nearest key levels are 1.1915, 1.1951, and 1.1988, as well as the Kijun-sen line at 1.1936 and the trendline. Pullbacks and breakouts of these levels and lines can serve as signals. Do not forget about placing a Stop Loss order at breakeven if the price moves 15-20 pips in the right direction. This will protect your trades against possible losses if the signal turns out to be false.
COT report
Last week that ended April 12, EUR/USD rose by 100 pips. Notably, for the past 6 weeks, professional traders have been actively reducing buy contracts and increasing sell contracts. Still, 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 increased slightly by 4,400. That is, the mood of the major players became more bullish. We said earlier that the COT report data suggested the end of the uptrend back in September last year. However, from that moment, the uptrend 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.
On the charts:
Levels of resistance and support are used as targets for opening buy or sell positions. You can place Take Profit levels near them.
Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator transferred to the 1-hour time frame from the 4-hour timeframe.
Support and resistance areas are the areas from which the price has repeatedly bounced off.
Yellow lines can be trendlines, 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 of the non-commercial group of traders.