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EUR/USD 5M
The EUR/USD pair continued its upward movement last Friday, which had begun a day earlier. Thus, over the past two trading days, the European currency has seriously strengthened its positions against the dollar, and the trend has changed to an upward trend on two timeframes. Perhaps the plan and forecast that we talked about in recent months has now begun to be implemented. Recall that, from our point of view, the dollar will continue to decline in the long term, and its last round of growth was no more than a round of correction on the 24-hour timeframe. Last Friday, there was nothing important that can be singled out from the macroeconomic reports for the euro/dollar pair. On this day, only the speech of the head of the European Central Bank President Christine Lagarde and the report of the ECB from the meeting on monetary policy were planned. Neither the first nor the second event had any expected impact on the market. Thus, traders had to rely on technique during the day. However, it was not difficult, since the pair only formed two signals that were not the most accurate, both near the critical line of the Kijun-sen and the extreme level of 1.1837. At first, the quotes bounced off these obstacles from below, forming a sell signal, and then overcame them, forming a buy signal. It is easy to guess that the first signal turned out to be false and according to it traders got a loss of about 15 points, but the second deal turned out to be profitable. On it, traders managed to earn approximately 25-30 points. The long position had to be manually closed at the end of the working day, as none of the target levels had been reached. Thus, it was a small profit, but we still managed to obtain it. Although with such low volatility as on Friday, it was very difficult to get this profit either.
Overview of the EUR/USD pair. July, 12. Inflationary week. The dollar is tired of growing, which the European currencies can use.
Overview of the GBP/USD pair. July, 12. Crazy pound or the bears couldn't stand it and gave up.
EUR/USD 1H
The recently formed downward trend line has already been canceled on the hourly timeframe, as the price surpassed it on Friday. Thus, the downward trend is canceled, as we have already mentioned above. In the near future, the price may try to overcome the Senkou Span B line, and if it succeeds, then the chances of continuing to move up will increase even more. On Monday, we still recommend trading from important levels and lines. The nearest important levels at this time are 1.1807, 1.1881, 1.1922, as well as the Senkou Span B (1.1890) and Kijun-sen (1.1835) 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. The calendars of macroeconomic events are completely empty in the European Union and the United States on Monday. Therefore, traders will have absolutely nothing to react to during the day.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair fell by 100 points during the last reporting week (June 29-July 5). Thus, one could expect to see a new weakening of the bullish sentiment of professional players in the Commitment of Traders (COT) report. This is exactly what we saw in the latest report that was released on Friday. The number of buy contracts (longs) for the reporting week increased by 4,000, and the number of sell contracts (shorts) - by 16.5 thousand. Thus, the net position of the "non-commercial" group of traders decreased by 12.5 thousand. Therefore, at the moment we can say that market participants continue to get rid of long positions and build up shorts. Therefore, it is possible to predict a further fall in the European currency. But not everything is so simple. We have already said that the movements of the pair over the past few months look just like a correction against the global upward trend. In addition, the US government and the Federal Reserve continue to inject hundreds of billions of dollars into the US economy, inflating the money supply and stimulating inflation. Therefore, big players can get rid of euro positions, but at the same time the dollar supply in the markets will grow, which may lead to the opposite effect. A situation may arise in which the net position of professional players on the euro will decline, while the euro currency will grow. Actually, in October-November-December 2020, this is exactly what happened. The green line of the first indicator (net position of the non-commercial group) was decreasing, while the euro was growing. Thus, we recommend that traders pay more attention to technical analysis.
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.
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