EUR/USD 5M
The EUR/USD pair was trading as if it was reluctant on April 28. We have noted rather weak volatility for several consecutive days. Naturally, it is very difficult to work in such conditions, open deals and make a profit. Thus, traders had to take into account the fact that volatility is very low. We have talked about this many times in our articles. If the pair goes from a low to a high of 40 points per day, how much can you earn on this movement? 20 points and even then, provided that the entire movement of 40 points will be fast, and not stretch for 24 hours. Naturally, nothing of the kind was observed during the third trading day of the week. The pair's quotes were in a 23 points wide horizontal channel throughout the European session. Any further comments on how the euro/dollar traded on Wednesday? We did not add this horizontal channel to the chart, since the pair even managed to form two relatively strong signals during the European session. Both are rebounds from the extremum level of 1.2076. However, in the course of their development, even to the nearest Kijun-sen line, which was located only 15 points away, it still couldn't reach the level. So, judge for yourself whether you should have entered the market at all? We believe that one should not, or at least should have closed trades at zero in the manual mode, since the probability of a weakly volatile flat was very high. Things were a little more fun during the US session. European Central Bank President Christine Lagarde's speech began (figure "1"), afterwards the price immediately went up, that is, the euro began to rise in price. Lagarde did not say anything very important, only that by June, up to 70% of the EU population will receive at least one dose of the vaccine, nevertheless, the markets reacted by buying euros. A new buy signal was formed around the same time, which should not have been worked out. Not only was it formed during Lagarde's speech, but also a few hours before the most important event - summing up the results of the Federal Reserve meeting and its Chairman Jerome Powell's press conference. It did not make any sense to consider the succeeding signals. We do not recommend opening deals during important fundamental events.
EUR/USD 1H
A "swing" began on the hourly timeframe, but traders failed to get the pair to settle below the critical Kijun-sen line. So, we formally have a correction, but at the same time the price is located at a tiny distance from the previous local high. The correction seems to be there, but it seems to have already ended. Both trend lines continue to indicate that the upward trend will continue, but the pair traded with a volatility of 40 points for several days. In general, it isn't the most favorable situation for trading. It is noteworthy that the price approached the Kijun-sen line three times and did not reach a point three times. We will analyze the results of the FED meeting and Powell's speech in the following articles, all the same it makes no sense to try to work out these events. In general, we still recommend trading from important levels and lines that are indicated on the hourly timeframe. The nearest important levels are 1.2076, 1.2113 and 1.2145, as well as the Kijun-sen line (1.2055). 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 15-20 points in the right direction. This will protect you against possible losses if the signal turns out to be false. The United States is set to publish GDP for the first quarter of 2021 on Thursday, which, according to various estimates, may range from 6.1% to 6.6% q/q. Thus, the US dollar may receive market support today.
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 increased by 120 points during the last reporting week (April 13-19). Notably, major players have actively been reducing buy contracts (longs) and opened sell contracts (shorts) instead. In the "non-commercial" group, the total number of Buy-positions has decreased from 240,000 to 190,000 and the number of Sell-positions has grown from 76,000 to 127,000 since the beginning of February. Therefore, it is evident that the bullish sentiment has been waning down, however, the sentiment is still bullish, and in the last two weeks it has begun to strengthen again. Recall that the Commitment of Traders (COT) reports has signalled the end of the upward trend since last September, when the lines of the first indicator moved as far apart as possible. However, we still remind you of the fact that money is still being injected into the US economy. Simply put, big players can trade as they please, in any direction, buy any currency, but if at the same time the money supply of dollars increases by trillions, the influence of the players themselves on the foreign exchange market becomes less. Accordingly, now the factor of an increasing money supply in the United States is in first place, not the behavior of non-commercial and commercial traders in the foreign exchange market. Professional traders opened 6,200 buy contracts (longs) and closed 8,500 sell contracts (shorts) during the last reporting week. Thus, their net position increased by 14,700 contracts. And so it is possible that the major players realized that the euro would still rise, and the dollar would fall, and so they decided to trade with the trend themselves. If earlier it was the big players who formed the trend, now they follow the trend. In general, from our perspective, there is a very high likelihood that the euro will keep growing in 2021.
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.