EUR/USD 5M
The EUR/USD pair continued to trade in absolute flat during the penultimate trading day of the week. All day long, the pair's quotes were inside a side channel with a range of 40 points. Several quite interesting macroeconomic reports were published in the United States, but, as we warned yesterday, they absolutely did not interest traders for various reasons. First of all, I would like to note that the GDP volume in the second estimate for the first quarter remained unchanged – 6.4%. Take note that orders for durable goods decreased by 1.2% m/m in April. These were the most important reports of the day and, as we can see, there was no reaction to them. However, what is there to react to, if the market participants were already familiar with the volume of GDP, and the report on orders for durable goods has not caused any reaction for more than a year, no matter what the figures are. What can we say about the reports on applications for unemployment benefits. They are even less significant than the previous two. Nevertheless, there were quite a lot of trading signals that were formed and it was even possible to make money on them, despite the flat and very small range of movement of the euro/dollar pair. Let's start in order. The first signal in the form of a rebound from the extreme level of 1.2190 happened at the beginning of the European session. It should have been used to open long positions. Almost immediately after longs were opened, the price returned to the level of 1.2190, but it did not settle below, and the Stop Loss was not yet set. Thus, the second signal, also for buying, should simply be ignored, since the longs were already open. Subsequently, the price reached the nearest target line Kijun-sen and bounced off it, allowing traders to earn about 17 points. At this point, it was necessary to immediately open a deal for short positions. The price immediately returned to the level of 1.2190 and settled below it, so the shorts should be kept open. But the downward movement did not continue and the quotes went back to the area above 1.2190, where it was necessary to manually close short positions. The profit on this transaction is another 10-12 points. Further, the price reached the level of 1.2190 several more times, but all subsequent signals should be ignored, since at that time two false signals were already formed near this level. The price no longer reached the Kijun-sen line, although it approached it at a distance of 1 point. In total, you could earn about 30 points, which is just fine in a low-volatility flat.
Overview of the EUR/USD pair. May 28. Walking through the throes of the US dollar.
Overview of the GBP/USD pair. May 28. Dominic Cummings has acknowledged the mistakes of the UK government during the pandemic.
EUR/USD 1H
The previous day's flat is more visible on the hourly timeframe. However, the upward trend still persists, and the euro may resume its upward movement at any time. We have already discussed the reasons in our fundamental articles, we recommend that you read the articles above. Thus, it makes no sense to think about selling in the medium term until the pair's quotes have settled below the rising trend line. We still recommend trading from the important levels and lines that are marked on the hourly timeframe. The nearest important levels at this time are 1.2160, 1.2243 and 1.2267, as well as the Senkou Span B (1.2147) and Kijun-sen (1.2213) lines. The lines of the Ichimoku indicator can move throughout the day, which should be taken into account when searching for trading signals. 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. Only minor publications will be published in America, such as the index of personal consumption expenditures or changes in the level of spending and income of the US population. We believe that these reports will be ignored. The calendar of macroeconomic events is completely empty for the European Union on Friday.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair rose by only 20 points during the last reporting week (May 11-17). The new Commitment of Traders (COT) reports, which was released yesterday in the US, showed that professional traders continue to build up buy positions in the European currency. A total of 10,700 Buy contracts (longs) and 1,600 Sell contracts (shorts) were opened. Thus, the net position increased by another 9,000 contracts. Take note that a few weeks ago the "non-commercial" group of traders, which is considered the most important of all, began to increase purchases of the euro again. We have repeatedly said that we believe the main reason for the euro's growth and the greenback's fall is the flooding of the American economy with dollars. But the COT reports show that the big players are also joining the trend, which is not in their power this time, but in the power of the Federal Reserve and the US government. One way or another, but the demand for the euro is growing, the supply of the dollar is increasing, so wherever you go, there is a wedge everywhere. Recall that around fall 2020, the COT reports showed the end of the upward trend, but either the bears simply lacked the strength and desire for a new downward trend, or the money from the Fed outweighed the scales, but the uptrend resumed. The first indicator eloquently shows that the red and green lines are moving away from each other again, which is a sign of an upward trend. In simpler terms, this means that professional players continue to build up longs, and commercial traders (hedgers) - build up shorts. Therefore, at this time, the COT reports again speak in favor of the fact that the euro will continue to grow.
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.