EUR/USD 5M
The EUR/USD pair was trading quite calmly on Wednesday. In principle, everything went like a well-trodden path. After a rather active Tuesday, Wednesday turned out to be ultra calm. The volatility of the day did not exceed 50 points. As we have said more than once, it is extremely difficult to count on high profits and a large number of strong signals with such volatility. In principle, this is exactly how it was yesterday. There were only two signals during the day. The first one is to buy, in the form of a rebound from the extremum level of 1.1707. The second one is for short positions, in the form of a breakthrough of 1.1707. At the first signal, traders could have time to exit without losses, since it took a long time for the price to go back to the level of 1.1707 and by that time it was already clear that there would be no trend movement. And the second signal should not have been worked out at all, since it was formed almost in the evening, and at night we do not recommend opening any positions. I would also like to say separately that the next report from the European Union was ignored this week. Of course, in fairness, it should be noted that the actual value of the inflation report coincided with the forecast value, and with the previous one. However, this does not change the essence of the matter. A day earlier, traders also ignored US and European reports. But unexpectedly, the markets worked out the Federal Reserve's minutes by selling the dollar, the reaction to which happens once a year, not more often. Thus, the general conclusion is as follows: traders continue to push the pair down, although neither bears nor bulls have enough strength for a strong movement.
EUR/USD 1H
The quotes of the pair still exceeded the level of 1.1707 on the hourly timeframe. It is still difficult to say how strong this breakthrough is, given that the price has bounced off this level twice before. However, as we said above, the bears continue to push the pair downward. It seems that the markets are now really under the influence of the "Afghan conflict" and buying up dollars, as the uncertainty around this event grows. And markets don't like uncertainty. Traders also seem to believe that the US central bank and Fed Chairman Jerome Powell will soon announce their readiness to start phasing out the quantitative stimulus program, which is an additional growth factor for the US currency. Thus, these two factors are probably the most important now and are driving the dollar's growth. On Thursday, we continue to recommend considering trading from important levels and lines. The nearest important levels at this time are 1.1612, 1.1707, 1.1756, 1.1852, as well as the Senkou Span B (1.1802) 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. The calendars of macroeconomic events are empty on Thursday, both in the United States and in the European Union. However, the markets do not need macroeconomic reports now. They feel great even without it and continue to gradually strengthen the US currency against the EU currency.
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.