EUR/USD 5M
The EUR/USD pair was trading in a predictable manner on May 3. The correction against Friday's movement was quite expected. Thus, an upward movement suggested itself on the first trading day of the week. Actually, the upward movement started right from the very beginning of the European trading session. The pair's quotes were below the Senkou Span B line at night, and then they crossed it at the beginning of the European session. Thus, the first and only signal of the day was formed - to buy. At this point, traders should have bought the pair. The pair was in an upward movement for the entire day and by the middle of the US session it reached the extremum level of 1.2076, around which it was possible to take profits, since it would still be difficult to count on a stronger movement (especially since this is a correction)... You should not have opened new positions on a signal near the 1.2076 level, since the day had already ended by that time, and a speech by Federal Reserve Chairman Jerome Powell was looming on the horizon. By the way, we also received macroeconomic reports that day. The number "1" marks the publication of the EU manufacturing business activity index for April, which slightly differed from the forecasted value and the previous value and therefore it did not provoke any reaction from market participants. The number "2" marks the time when the US ISM Manufacturing PMI was published, which unexpectedly turned out to be much worse than analysts' forecasts, which only increased the pressure on the US dollar during the day. Thus, yesterday's macroeconomic reports helped the correction, and traders could earn 37 points during the day, which is just fine for a correction Monday.
EUR/USD 1H
An upward correction is clearly visible on the hourly timeframe after Friday's downward movement. The price reached the 1.2076 level at the end of the day, but it may rise to the critical line in the future. Recall that both uptrend lines remain in effect, so the upward trend remains. However, the correction against the 450-point uptrend is still too small (only 100 points), so we can expect a new round of decline this week. Just in time for the trend lines, which are practically merging at this time. If traders manage to push the EUR/USD pair to settle above the Kijun-Sen line, then this will significantly increase the likelihood of a resumption of the upward trend. In general, we still recommend trading from important levels and lines that are indicated on the hourly timeframe. The nearest important levels are 1.2003, 1.2076 and 1.2113, as well as the Senkou Span B (1.2030) and Kijun-sen (1.2081) lines. 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. No important reports or events scheduled for Tuesday in the European Union and the United States. Therefore, the day can be "purely technical". If the pair's quotes remain below the critical line, then we will expect a new round of downward correction.
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 50 points during the last reporting week (April 20-26). Take note that major players have been strenuously reducing buy contracts (longs) and opening sell contracts (shorts) since February. However, in the last couple of weeks, there has been an increase in bullish sentiment among the group of non-commercial traders. Let us recall that this is the most important group of traders, which usually determines the trading vector. Professional players opened 5,500 buy contracts and 2,900 sell contracts during the reporting week. Thus, the net position increased by 2,600 contracts. This is not much for the euro. In general, the number of buy contracts remains much higher than that of sell contracts: 202,000 versus 121,000.
Therefore, in general, we can conclude that the upward mood persists among traders and has even slightly strengthened. We also remind you about the factor regarding the injection of trillions of dollars into the American economy, which also affects the dollar exchange rate in the international currency market. Let us remind you that even if the major players sell billions of euros, but at the same time the Federal Reserve prints trillions of dollars, the euro will still go up in price. The Commitment of Traders (COT) reports reflect the actions of major players in the European currency, but do not reflect the actions of the Fed against the dollar. Given the fact that the US government will continue to develop more and more stimulus packages for the economy, we believe that the economy continues to remain in a "post-crisis state", when it is impossible to do without cash injections and incentives. This means that these infusions are in the first place in terms of the degree of influence, and not the actions of large players.
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.