EUR/USD 5M
The EUR/USD pair moved very poorly on Friday. First of all, the volatility of the day was only 54 points. Secondly, there was no intraday trend movement. Therefore, it was extremely difficult to trade the pair on Friday. On the other hand, the pair showed excellent volatility and a good trend on Wednesday and Thursday. It was logical that on Friday, in the absence of important fundamental events, a flat or correction would be observed. In fact, there was something in between these two concepts. Nevertheless, the trend for the euro/dollar pair remains downward, so we can expect a further fall in the European currency in the new week. The European Central Bank meeting should not prevent the bears from selling the pair. Only Friday's NonFarm Payrolls report is a real threat to the dollar, as it may be below the forecast value for the third time in a row. Now consider the trading signals. All of them formed around the same level on Friday - the extreme of 1.1147, which is a sign of a flat, if you remember. At first, the price settled below this level and managed to go down about 20 points, then it settled above this level and managed to go up about 20 points too. That is, 20-30 points is the high that traders could earn on Friday. However, it is good that there were no losses, since the movement was very similar to the side. But, since the pair in both cases passed at least 20 points up, then a Stop Loss at breakeven should have been set for both transactions.
COT report
The new Commitment of Traders (COT) report, which was released yesterday, turned out to be very interesting. First of all, from the point of view that the European currency, even without really adjusting, began a new decline, but at the same time, recent COT reports indicate that non-commercial traders have increased buy contracts (long positions), which are the most important category. Recently, their net position has grown, and the mood has become bullish again. "Moderately bullish." However, over the past two weeks, the euro currency has fallen by 350 points, which clearly does not correspond to the mood of professional players. However, this data should not be misleading. First of all, the last decline by 150 points after the Federal Reserve meeting happened at the end of the week, so these days were not included in the latest COT report (it comes out three days late). Secondly, if we cut off the last round of the fall of the euro currency, it turns out that there has not been any strong decline yet. That is, the mood of traders may change in the direction of bearish in the next COT report, or it will not change, but then the euro will stop getting cheaper. The green and red lines of the first indicator (the net positions of the "non-commercial" and "commercial" groups) are currently moving away from each other, which indicates the beginning of a new trend. The growth of the green line indicates the beginning of a new upward trend. Therefore, we need to wait for the next COT report so that we can make a more accurate conclusion.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. January 31. The ECB has often focused on the Fed before, but not this time. The ECB meeting will not give anything to the markets.
Overview of the GBP/USD pair. January 31. The Bank of England may raise the key rate to 1% by May this year.
Forecast and trading signals for GBP/USD on January 31. Detailed analysis of the movement of the pair and trading transactions.
EUR/USD 1H
The technical picture continues to indicate a downward trend on the hourly timeframe. The Fed meeting was left behind, and after it there was an understanding that monetary policy in the United States will continue to tighten throughout 2022. Of course, this does not mean that the dollar will now grow constantly, but while the pair is below the trend line and the critical line, it is absolutely necessary to consider more short positions. On Monday, we allocate the following levels for trading - 1.1121, 1.1192, 1.1234, 1.1274, as well as the Senkou Span B (1.1373) and Kijun-sen (1.1229) lines. The lines of the Ichimoku indicator may change their position during the day, which should be taken into account when searching for trading signals. Signals can be "bounces" and "breakthroughs" of these levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price went in the right direction of 15 points. This will protect you against possible losses if the signal turns out to be false. On January 31, the European Union is scheduled to publish a report on GDP for the fourth quarter. This is quite an important report, but on Thursday, for example, the US GDP report was ignored. We believe that the market reaction will not be strong to this report at any value. There are no important reports or other events scheduled in the United States, so today may be a fairly calm day and with low volatility.
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.