EUR/USD 5M
The EUR/USD pair moved as if the ECB raised the rate by 0.5% during the penultimate trading day of the week. Of course, this is a joke, but otherwise it is very difficult to explain the growth of the European currency by 180 points from the low of the day. Just think about it and analyze at least the last five or six meetings of the European Central Bank and the Federal Reserve. There has never been such a reaction. But what, in fact, happened yesterday? The key rate remained unchanged, the timing and scope of the PEPP program remained unchanged. ECB President Christine Lagarde's rhetoric, according to some experts, has become a little more hawkish. From our point of view, Lagarde did not tell the markets anything that could provoke the euro's growth by 180 points. Moreover, we remind you that the euro has been growing since the very beginning of the week, when there were no factors of its growth in principle. We have already said that the eurozone GDP report should have rather brought the pair down. That is, it turns out that all week traders ignored statistics and actively bought euros, and yesterday they ignored the results of the ECB meeting, Lagarde's speech and bought euros in bundles. Such things. What is most interesting, yesterday traders could earn almost 180 points of profit. The fact is that immediately after the announcement of the meeting's results, the pair's quotes fell to the Senkou Span B line and bounced off it perfectly in accuracy. Therefore, it was a buy signal. The only thing is that it was very risky to work it out. After all, there was nothing hawkish in the results of the meeting, which means it was impossible to count on growth. The only thing that could be done here was to rely on the strength of the technique and just take a chance by opening a long position and setting a Stop Loss below the Senkou Span B line. Those who did so made a huge profit. The price stopped growing only near the extreme level of 1.1434.
COT report
The new Commitment of Traders (COT) report, which was released, 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. February 4. The ECB left the key rate unchanged and will continue to stimulate the economy.
Overview of the GBP/USD pair. February 4. The Bank of England raised its key rate, and the pound reluctantly rose.
Forecast and trading signals for GBP/USD on February 4. Detailed analysis of the movement of the pair and trading transactions.
EUR/USD 1H
On the hourly timeframe, the euro/dollar pair adjusted slightly yesterday in the first half of the day, but in the second it jumped up with renewed vigor. It is obvious that the ECB should be "blamed" for this movement, but it just did nothing to provoke the euro's growth, which, moreover, is not profitable for it. Thus, we draw attention to the illogicality of yesterday's growth and warn that the market may try to win back all this growth in the coming week. On Friday, we allocate the following levels for trading – 1.1274, 1.1360, 1.1434, 1.1482, 1.1507, 1.1534, as well as the Senkou Span B (1.1246) and Kijun-sen (1.1287) 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 against possible losses if the signal turns out to be false. On February 4, the current crazy week will continue with the publication of the NonFarm Payrolls report in America. This report is no less important than the ECB meeting. But now we don't even want to predict how the pair may move tomorrow after it rose by 200 points out of the blue yesterday.
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.