FX.co ★ Forecast and trading signals for EUR/USD on January 26. COT report. Analysis of Monday. Recommendations for Tuesday

EUR/USD 15M

Both linear regression channels are directed to the downside on the 15-minute timeframe, which signals a continued downward movement in the short term. This is an illustration of a downward movement within a rising channel on the hourly timeframe. Since none of the channels is still trying to turn up, this gives a good chance of generating buy signals near the lower border of the channel on the hourly timeframe.

EUR/USD 1H

The euro/dollar pair was moving according to the technical picture on the hourly timeframe on Monday, January 25. After the price has reached the upper boundary of the channel, it was reasonable to assume that a downward movement would begin. Thus, the downward movement on Monday was absolutely logical. Since the price did not leave the rising channel, so now we expect a round of growth, back to the upper channel line and the previous local high. In general, the upward trend continues for the euro/dollar pair. Therefore, we continue to recommend considering bull trading. Rebounds from the Kijun-sen line, the lower border of the channel, can be used as buy signals. Short positions can also be considered, but we do not recommend trading against the trend. In general, the euro continues to be very close to 2.5-year highs, so the upward trend persists in all time frames.

COT report

The EUR/USD pair fell by 80 points during the last reporting week (January 12-18). As we mentioned above, the pair began to correct globally, however, the upward trend was not canceled. The latest Commitment of Traders (COT) reports show just that. The previous COT report showed a sharp increase in net positions of the "non-commercial" group, the latest COT report also showed that non-commercial traders are increasing their buy contracts (longs). If a week earlier the net position increased due to a reduction in the number of sales contracts (shorts), now the non-commercial group has opened 8,200 new buy contracts and only 1.4 thousand sales contracts. Thus, the net position has grown again, by almost 7,000 contracts. This means that the mood of the most important group of traders continues to become more bullish. Indicators testify to the same. The first indicator shows that the red and green lines are moving away from each other, which indicates that the trend (in our case, the upward trend) is maintained. The second indicator shows the net position of non-commercial traders, but on a chart. That is, we can clearly see how they are becoming more bullish. From above, we can conclude that the uptrend will continue with a high degree of probability. We drew the opposite conclusion a couple of months ago, but the bears turned out to be so weak that they could not start a new trend.

Yesterday, the most interesting event was European Central Bank President Christine Lagarde's speech. She did not mention anything interesting for the markets. Recall that the central bank meeting took place last week, so everything that the markets needed to know had already been announced. Lagarde spoke about the creation of a new climate change center. "The Climate Change Center is the structure we need to address this issue urgently and decisively," Lagarde said. However, the markets were hardly interested in this information. The EUR/USD pair was trading exclusively on technical factors during the day, which absolutely corresponds to an almost empty calendar of fundamental events.

No important events scheduled for Tuesday. It is unlikely for today's trades to be based on the US Consumer Confidence Indicator, set for release this afternoon. Thus, technique will be prioritized. As we suggested in the fundamental analysis articles, the US dollar could be under market pressure for several more months if the US Congress approves the stimulus package for the US economy. This would mean an additional $2 trillion taken out of nowhere, which will increase the supply in the market, causing it to fall again. It could lead it to it. Based on this, regarding the most probable factor for the euro's growth, then we are inclined to believe that the upward movement will continue. In any case, we have a rising channel, it will be possible to determine the end of the trend once the quote has left it.

We have two trading ideas for January 26:

1) Buyers return to the game and slowly push the pair up. Thus, the trend is currently upward. You are advised to open new long positions while aiming for the Senkou Span B line (1.2169) and the resistance level of 1.2190 in case of a rebound from the lower line of the rising channel. Take Profit in this case can be up to 60 points. If the pair settles below the channel, this will reverse the upward trend and the relevance of long positions.

2) Bears have let go of the initiative. Therefore, short positions are irrelevant now. You can consider trading bearish again if the price settles below the rising channel. In this case, you are advised to open new short positions while aiming for support levels 1.2077 and 1.2054. Take Profit in this case can be up to 50 points.

Forecast and trading signals for GBP/USD

Explanations for illustrations:

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.