EUR/USD 5M
The EUR/USD pair showed a rather strong and, most importantly, a recoilless upward movement last Friday. It is noteworthy that this movement began in the morning, that is, it could not be provoked by macroeconomic reports, since the European Union did publish anything interesting in the morning. Moreover, during the day, there was only one report that could pique the interest of the markets. But they were interested in it because not only did the consumer confidence index fall in August, but it actually plunged. That is why the dollar continued to fall in the US trading session. However, this movement is actually good for us, since it was really recoilless, which made it possible to trade much more profitably per trade than usual. Generally speaking, there was only one trading signal for Friday - a buy signal at the beginning of the US trading session, when the price broke through the extremum level of 1.1756 and the critical line. The movement, of course, began a little earlier, but this signal also made it possible for traders to make great money. The movement continued almost until the very end of the foreign exchange market, but the price failed to reach the nearest target level (except for the resistance level of 1.1784, which the price easily overcame). Thus, the long position should have been manually closed in the evening at a profit of about 33 points. Excellent result.
Overview of the EUR/USD pair. August 16. Preview of the week. A new wave of the pandemic in the US may postpone the Fed's plans to wind down QE.
Overview of the GBP/USD pair. August 16. Preview of the week. The British pound is awaiting information from the Bank of England and the Fed.
EUR/USD 1H
You can also clearly see that an upward movement has begun on the hourly timeframe, but a more important point is the rebound from the level of 1.1704, which happened a few days ago. Thus, the likelihood of further upward movement is now very high, as we have said more than once in our fundamental articles. Traders need to overcome the Senkou Span B line by today or tomorrow, which is a strong resistance. Overcoming it will further increase the likelihood of the euro's further growth and the fall of the US dollar. We still recommend trading from important levels and lines on Monday. The nearest important levels at this time are 1.1704, 1.1756, 1.1852, 1.1894, as well as the Senkou Span B (1.1810) and Kijun-sen (1.1755) lines. The Ichimoku indicator lines can change their position 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 points in the right direction. This will protect you against possible losses if the signal turns out to be false. No important macroeconomic reports either in the United States of the European Union on August 16. Thus, people will have to trade on pure technique. We also remind you that recently the pair regularly shows days with low volatility, often only 30-40 points. There are on average three such days out of every five. Therefore, it is also highly likely that market activity will be at zero today.
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 140 points during the last reporting week (August 3-9). Since the European currency has generally fallen in recent weeks, it is not surprising that the Commitment of Traders (COT) report showed that the bullish sentiment has weakened among professional traders. However, the euro/dollar pair has been declining in recent weeks very reluctantly, and major players have massively stopped closing buy contracts and open sell contracts. A group of non-commercial traders opened 11,000 Buy-contracts (longs) and 18,000 Sell-contracts (shorts) during the reporting week. Thus, the net position for professional players decreased by another 8,000. However, the indicators below the chart show that although the net position continues to decline, the rate of its decline is decreasing. In addition, as we have already said, the euro dropped to the level of 1.1700, around which the probability of an upward reversal is very high. The first indicator shows that the green and red lines (net positions of the "non-commercial" and "commercial" groups) continue to move towards each other, which means the continued weakening of the upward trend. Recall that when the lines begin to narrow, it means the end of the current trend. However, at the same time, the situation on the chart looks just like a correction. Thus, we believe that at this time, both indicators are signaling exactly a correction. As before, we must not forget that the Federal Reserve has not yet completed the quantitative stimulus program, thanks to which the US economy continues to be pumped with money, which provokes an increase in inflation and an increase in the supply of the dollar in the foreign exchange market. Therefore, we are still expecting a new round of decline in the dollar. The sentiment of the major players remains bullish as the total number of buy contracts still exceeds the number of sell contracts.
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.