EUR/USD 5M
The EUR/USD pair moved again with low volatility on Tuesday, which amounted to just over 40 points. However, if on Monday there was no important information at the disposal of traders, then on Tuesday, there were still several more or less interesting macroeconomic reports. For example, the most important report of the day can be noted - the ISM index of business activity in the US services sector, which, instead of the forecast of 59.9, amounted to 61.9 points. The time of publication of this report is marked with the number "2" in the chart and, as you can see, the most important report of the day triggered a movement of the pair by 10 points. This is exactly what we talked about yesterday: the markets are likely to continue to ignore most of the data. The number "1", for example, marks the time of the release of the index of business activity in the service sector of the European Union, but here there was no reaction at all. Number "3" is the time when European Central Bank President Christine Lagarde started speaking. However, it was scheduled for the very evening, so traders had the opportunity to close all positions before this event, so as not to risk it. And, by and large, there was nothing to close, since during the day not a single trading signal was generated on the 5-minute timeframe. With such low volatility, the pair simply could not reach any extremum level or an important line of the Ichimoku indicator during the day. All positions should have been closed in the evening, the price reached the level of 1.1612, but it was too late to open deals.
EUR/USD 1H
You can see that the euro/dollar pair is currently trying to resume its downward movement on the hourly timeframe. The price once again settled below the critical line, while the downward trend continues, as the downtrend line remains relevant. Thus, the pair may indeed drop back to the level of 1.1568 in the coming days and overcome this local low. The price is not even approaching the trend line now, which speaks not of the strength, but of the stability of the current strengthening of the dollar. On Wednesday, we highlight the following levels for trading - 1.1541, 1.1568, 1.1612, 1.1666, 1.1704, as well as the Senkou Span B (1.1659) and Kijun-sen (1.1618) 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. There will be little macroeconomic statistics again on October 6. The European Union is set to publish the report on retail trade for August, and in the US - the report on the ADP labor market. Recall that the ADP report reflects the change in the number of employed in the private sector and is the second most important indicator after NonFarm Payrolls. Thus, we again do not expect high volatility and strong reaction of traders to macroeconomics and foundation.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The mood of non-commercial traders became "less bullish" again during the last reporting week (September 21-27). And in the near future it may become fully bearish, because at the moment the number of buy and sell contracts for major players is practically the same. This means that the mood is "neutral" at this time, but this word does not accurately reflect what is happening in the market. According to the mood of professional traders, there is now a clear down trend. Thus, the mood is not "neutral". During the reporting week, the Non-commercial group opened 7,000 buy contracts (longs) and 16,000 sell contracts (shorts). Thus, the net position decreased by 9,000. This is exactly what we talked about in the previous paragraph: traders at this time are actively getting rid of the euro currency, and, accordingly, buy the US dollar. Thus, at this time, the readings of the COT reports and the movement of the EUR/USD pair have a correlation. However, there are two important points to keep in mind. First, the Federal Reserve has not yet begun to roll back its QE. The second - the current downward movement - is still a correction against the global uptrend, in which the pair has been for a year and a half. Thus, the "foundation" and the COT reports give us the opportunity to assume that the fall of the euro will continue. But, recall, each hypothesis and assumption must be confirmed by specific technical signals. Now these signals are there.
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.