FX.co ★ Forecast and trading signals for EUR/USD on July 5. Analysis of the previous review and the pair's trajectory on Monday

EUR/USD 5M

The EUR/USD pair started an upward movement during the last trading day of the week. However, there are many questions left to this upward movement by the end of the day and the whole week. As we discussed in our previous articles, the market reaction to the latest NonFarm Payrolls report raises big questions. Theoretically, it could be covered by the unemployment report (it turned out to be worse than forecasted). But, from our point of view, the Nonfarm report is still more important and could not be overshadowed by unemployment. The rest of the data from America was less important, and European Central Bank President Christine Lagarde's speech did not provide any new and important information. It is noteworthy that all these events took place at the same time. As a result, the dollar started to fall, although the Nonfarm report turned out to be stronger than forecasted. And we believe that this is the illogicality of the movement on Friday. Trading on Friday was quite easy, since the very nature of the movement and its relationship with the fundamental background were quite simple and understandable. The first signal - to sell - was formed in the European session and it was even possible to earn about 10 points from it. The price has surpassed the extremum level of 1.1837 from top to bottom. Since the deal was still open at the beginning of the US session (that is, at the time when all the most important events of Friday occurred), it had to be manually closed. Further, all subsequent signals should be ignored, since they were formed during or immediately after the release of US reports and Lagarde's speech. As a result, five false signals were formed around the 1.1837 level. Naturally, they were due to the reports, but nonetheless. In any case, trades should not have been opened near this level. In general, we can also say that the pair was trading quite calmly, as for a very strong macroeconomic background on Friday.

Overview of the EUR/USD pair. July 5. Strong Nonfarm triggered the fall of the US dollar...

Overview of the GBP/USD pair. July 5. Janet Yellen warns of possible US default.

EUR/USD 1H

The downward trend is clearly visible on the hourly timeframe, but there is still no trend line or channel. Therefore, the dollar still remains in a better position than the euro, but the lack of a reference point on the hourly chart makes it difficult to determine a trend change. Last Friday, the illogicality of the movement and the market reaction to what is happening may indicate a possible change in the trend to an upward one. But we cannot yet determine this. On Monday, we still recommend trading from important levels and lines. The closest important levels at this time are 1.1800, 1.1837, 1.1922 and 1.1971, as well as the Senkou Span B (1.1997) and Kijun-sen (1.1873) lines. The Ichimoku indicator lines can move 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. No important event in both the US and the EU on Monday. Thus, today, most likely, the movement of the EUR/USD pair will be as calm as possible. However, in recent months it is in most cases as calm as possible.

We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.

COT report

The EUR/USD pair rose by 10 points during the last reporting week (June 22-28). The changes were minimal. There were serious changes (both in the COT report and in the price plan) a week earlier, when the pair fell by 250 points, and big players closed a large number of buy contracts (longs). According to the latest Commitment of Traders (COT) report, professional traders closed about 500 buy contracts and opened 3.6 thousand sell contracts (shorts) during the reporting week. This means that the net position for the non-commercial group of traders dropped 4,000 at once, which is quite a bit. Therefore, major players remain bullish, but the sentiment continues to weaken. You can see this in both indicators in the chart above. On the first indicator, the green line (net position of the non-commercial group) continues to approach the red line (net position of the commercial group), which means the end of the current upward trend. Maybe it is the global trend that will not end, but at this time a new downward trend segment of the trend is clearly visible (recall that on the 24-hour timeframe this segment may be the second, corrective with a target of 1.1700). The second indicator shows that the net position of non-commercial traders have decreased. The same thing: since this indicator is declining, this means that the chances for the euro's growth are also falling at this time. However, in general, we recall that the total number of Buy-positions for large players is now 210,000, and Sell-positions - 124,000. That is, the market sentiment is still bullish. Plus, do not forget about the fact that the Federal Reserve and the Congress are injecting huge amounts into the US economy, as well as the fact that inflation is high in America.

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.