EUR/USD 5M
The EUR/USD pair continued to trade in the horizontal channel of 1.2160-1.2243 on Thursday. Despite the fact that the quotes went outside this range twice, they still spend most of their time within it. The movement of the last two weeks cannot be called a classic flat. Nevertheless, there are many of its signs. Macroeconomic data have practically no effect on the pair's movement. However, we have already spoken about this many times. On Tuesday, there were a lot of macroeconomic statistics, and on Wednesday - few, but the movements practically did not differ from each other. Thus, we only have to figure out which signals should be processed and how much could be earned in yesterday's trading. Signals on Wednesday began to form from the very beginning of the European session. The price immediately overcame the level of 1.2213, which is a sell signal. However, there was no need to rush to open short positions, since two strong lines of the Ichimoku indicator lay 13 points lower at once: Senkou Span B and Kijun-sen. Of course, in a flat they are not as strong as in a trend, but the probability of a rebound from them was still high. However, the price crossed these lines without any problems, which allowed traders to open sell orders with a target of the extremum level of 1.2160. Unfortunately, the price did not reach this value by only 4 points. Thus, the trade did not close at about 30 pips in profit, as we expected. Of course, traders could manually close it in profit, but it was really difficult to predict a reversal at the very end of the European session in the absence of important events and publications. Thus, in the end, the deal was closed at breakeven by Stop Loss. This was followed by a new buy signal in the form of overcoming the Senkou Span B and Kijun-sen lines. But in this case, one should not rush to open longs, since the extremum level 1.2213 lies just above. At the moment of overcoming this level, the time was already approaching the evening and the volatility began to decline. Thus, in the end, only one trade was opened during the day and that did not bring any profit.
Overview of the EUR/USD pair. June 3. Calm, only calm. There is no reason to panic about inflation.
Overview of the GBP/USD pair. June 3. The Fed will wait for more significant progress before tightening monetary policy.
EUR/USD 1H
Nothing changed on the hourly timeframe again on Thursday. The pair continues to remain in a very limited range, but at the same time on the hourly timeframe it is still visible that the current movement is not a classic flat. Last week, quotes broke the upward trend line, but this does not play any role now. We have warned that despite breaking the trend line, the upward trend will still persist. Traders still cannot get the pair out of the 1.2160 - 1.2243 range, so the price can trade from the top to the bottom for some time and vice versa. On Thursday, we still recommend trading from important levels and lines that are indicated on the hourly timeframe. The nearest important levels at this time are 1.2160, 1.2213, 1.2243 and 1.2267, as well as the Senkou Span B (1.2197) and Kijun-sen (1.2198) lines. The Ichimoku indicator lines can move during the day, which should be taken into account when looking 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. On Thursday, the European Union is only scheduled to publish the index of business activity in the service sector for May, which is unlikely to provoke at least some market reaction, and a whole package of various statistics will be published in the United States. The most important are the ADP report and the ISM service sector PMI. This is the kind of data that markets can react to.
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 60 points during the last reporting week (May 18-24). The new Commitment of Traders (COT) reports, which was released yesterday, showed that professional traders continue to increase their buying positions in the European currency. This time, they opened 3,800 new Buy contracts (longs) and closed 1,400 Sell contracts (shorts). Thus, the net position for this group of traders increased by 5,200. Not much, but also not a little. And so, the bullish mood of market participants becomes stronger again, which increases the euro's prospects for succeeding growth in 2021. The green and red lines (net positions of commercial and non-commercial traders) of the first indicator continue to move away from each other, which indicates the strengthening of the current trend (in our case, the upward trend). Therefore, at this time, the COT report clearly signals a more preferable continuation of the euro's growth. In general, professional traders have opened 240 thousand contracts for buying and 133 thousand for selling. And so there is almost twice a difference. But we continue to believe that the main factor is not the actions of professional players, but the actions of the Federal Reserve and the US Congress. The chart above clearly shows that at a certain point, the first indicator began to signal the end of the upward trend, that is, large players began to reduce longs and move to shorts. However, this did not lead to a reversal of the global trend downwards, which indicates other, more significant factors affecting the exchange rate of the European currency.
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.