EUR/USD 5M
The EUR/USD pair moved again with low volatility on Thursday. The market experienced a slight surge of emotions only the night before last, when the Federal Reserve announced the results of the meeting. And even then, this surge was not too strong. It is for this reason that in yesterday's articles we did not want to focus on the market's reaction to the Fed meeting: it was completely unclear what the reaction would be in the end, in total. Now we can say with more confidence: the reaction was quite weak, although the US dollar still declined, since most of the Fed's statements turned out to be disappointing, although very predictable. As for the past day, traders could pay attention to only one report during the day. This report was very important – US GDP for the second quarter. The moment when it was published is marked with the number "1" on the chart. As you can see, the markets easily and simply once again ignored a rather important report, although its value was again disappointing for the US currency. GDP in the second quarter grew by only 6.5% q/q, with a forecast of + 8.5% q/q. However, the overall volatility of the day of about 50 points suggests that traders are not interested in this report at all. As for trading signals, there were not many of them again, since the volatility remained weak. The pair's quotes crossed the important level only twice during the day. The first time there was a rebound from the level of 1.1881, the second time it was completely absurd to overcome it. Thus, traders could only work out the first sell signal, which turned out to be false and brought a loss of about 10 points. No more trading deals should have been opened, there was no reason for this.
Overview of the EUR/USD pair. July 30. Chasing China.
Overview of the GBP/USD pair. July 30. Jerome Powell and US GDP disappointed dollar bulls.
EUR/USD 1H
The upward movement continues for the euro/dollar pair on the hourly timeframe, which looks much more impressive than on the 5-minute timeframe. There is an upward trend and it is supported by an upward trend line. However, at the moment, the quotes have moved away from their last local low by only 100 points, which is very small. Thus, we still believe that the upward trend will continue, but at the same time we take note of the low volatility. On Friday, we still recommend trading from important levels and lines. The nearest important levels at this time are 1.1881, 1.1922 and 1.1971, as well as the Senkou Span B(1.1801) and Kijun-sen(1.1822) lines. The lines of the Ichimoku indicator can move during 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 points in the right direction. This will protect you against possible losses if the signal turns out to be false. On Friday, the European Union will publish the consumer price index for July, which, according to forecasts, may grow to 2.0% y/y. Also, data on unemployment for June and GDP for the second quarter will be published, which promises to grow by 1.5% q/q. Thus, the reports in the EU will be very important, but yesterday there was also an important report in the US, and there was no reaction to it, so we need to be prepared that the same picture will be observed today. ECB President Christine Lagarde will also deliver a speech in the European Union, and several secondary reports will be published in the United States.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair fell by 60 points during the last reporting week (July 13-19). In recent weeks, major players have continued to reduce the number of Buy contracts (longs) and increase sell contracts (shorts). This is clearly seen in the first indicator. The green line (net position of the "non-commercial" group) continues to decline, while the red line (net position of the "commercial" group) continues to grow. Recall that when these two lines move towards each other, it means that the current trend is coming to an end or has already ended. However, we have already repeatedly drawn your attention to the fact that the global injection of cash into the US economy continues, as the Federal Reserve has repeatedly stated. Thus, a rather paradoxical situation turns out: professional traders are selling the euro, but at the same time it is getting very weak and has excellent chances of resuming the upward trend. This is because the money supply in the United States continues to increase and the dollar is now also depreciating due to high inflation and high supply in the foreign exchange market. It turns out to be a situation in which the euro is getting cheaper mostly due to the fact that players are selling it, and the dollar is getting cheaper because of the actions of the Fed and the US government. Consequently, as a result, that currency falls, the rate of reduction in price of which is higher. So far, this is the euro currency. But its decline is very weak. During the reporting week, non-commercial traders opened another 7,000 contracts to sell and closed 5,600 contracts to buy. Thus, their net position decreased by another 12.6 thousand contracts, and the mood became even less bullish. The total number of buy contracts from the non-commercial group is already 210 thousand, and for sale - 162 thousand. More recently, the gap was twofold.
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.