The EUR/USD pair continued to trade inside the 0.9877-1.0072 horizontal channel and not far from its 20-year lows. The flat or "swing" has been going on for several weeks now and is right around the 20 year lows. That is why we believe that the downward trend is not over and will resume. Yesterday, the key event of the day was the European Central Bank meeting. It became known that experts' forecasts coincided with reality, and the central bank raised the key rate by 0.75%. Moreover, ECB President Christine Lagarde said that the rate will continue to rise, and admitted that the rate of its growth may even increase. Thus, the ECB is heading for the fastest rate hike in the hope of catching up with the Federal Reserve. We would say that this is very good news for the euro. Lagarde made it clear that high inflation is not part of the ECB's plans, so monetary policy will be tightened until the end of 2022. However, as we can see, the euro fell immediately after these statements, and after a few hours it was already rising. We believe that in the current circumstances, we need to wait for the price to leave the horizontal channel, since without this trend we will not wait.
In regards to trading signals, the situation was far from being great. Movements during the day were ragged, which is not surprising, given the fundamental background. The first signal was formed at the beginning of the European session after consolidating below the Senkou Span B. It turned out to be false, and the price could not go down even 15 points. The next signal was formed exactly at the time when the results of the ECB meeting were summed up. The price once again consolidated below the Senkou Span B and fell to the critical line. We believe that this signal could be worked out and it brought profit. This was followed by three buy signals at once - rebounds from the critical line - and each time the price went up at least 15 points. Therefore, Stop Loss should have been placed at breakeven for all transactions.
COT report:The Commitment of Traders (COT) reports on the euro in the last few months clearly reflect what is happening in the euro/dollar pair. For most of 2022, they showed an openly bullish mood of commercial players, but at the same time, the euro fell steadily at the same time. At this time, the situation is different, but it is NOT in favor of the euro. If earlier the mood was bullish, and the euro was falling, now the mood is bearish and... the euro is also falling. Therefore, for the time being, we do not see any grounds for the euro's growth, because the vast majority of factors remain against it. During the reporting week, the number of long positions for the non-commercial group decreased by 8,500, and the number of shorts decreased by 5,000. Accordingly, the net position decreased by about 3,500 contracts. This is not much, but this is again an increase in the bearish mood among the major players. After several weeks of weak growth, the decline in this indicator resumed. From our point of view, this fact very eloquently indicates that at this time even commercial traders still do not believe in the euro. The number of longs is lower than the number of shorts for non-commercial traders by 47,000. Therefore, we can state that not only does the demand for the US dollar remain high, but that the demand for the euro is also quite low. The fact that major players are in no hurry to buy the euro may lead to a new, even greater fall. The euro has not been able to show even a tangible correction over the past six months or a year, not to mention something more.
We recommend to familiarize yourself with:Overview of the EUR/USD pair. September 9. The ECB raised the rate by 0.75%, the euro continues to remain in a coma.
Overview of the GBP/USD pair. September 9. The British pound is floating around 37-year lows.
Forecast and trading signals for GBP/USD on September 9. Detailed analysis of the movement of the pair and trading transactions.
EUR/USD 1HThe pair continues to trade on the hourly timeframe in a mode very similar to the "swing". The price continues to be inside the 0.9877-1.0072 horizontal channel, so it is not very convenient to trade now. It is best to wait for the trend to resume. We highlight the following levels for trading on Friday - 0.9877, 1.0019, 1.0072, 1.0124, 1.0195, 1.0269, as well as Senkou Span B (0.9996) and Kijun-sen (0 .9947). There is still no level below 0.9877, so there is simply nothing to trade there. Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. There are also secondary support and resistance levels, but no signals are formed near them. Signals can be "rebounds" and "breakthrough" extreme levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price has gone in the right direction for 15 points. This will protect you against possible losses if the signal turns out to be false. No important events planned in the European Union and the United States for today, but the market may continue to work out the results of the ECB meeting. Therefore, you can prepare for an active Friday.
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.