EUR/USD 5M
The EUR/USD pair was trading mostly sideways again on Tuesday. Despite the fact that the pair managed to overcome the important level of 1.1704, the current movement is downward only formally. In fact, the pair is decreasing by 20-30 points per day at best. Yesterday I spent most of the day in one place, which is clearly seen in the chart above. Thus, it is still quite difficult to trade the pair due to weak volatility and weak downward trend. Speeches by European Central Bank President Christine Lagarde (number 1 in chart), Federal Reserve Chairman Jerome Powell and US Secretary of Treasury Janet Yellen (number 2 in chart) were scheduled for Tuesday. All three speeches could, in theory, have an impact on the euro/dollar pair. In reality, there was no reaction from the markets, and there was no information that could be worked out from the officials. Lagarde in her speech did not touch upon the topic of monetary policy and economics at all. Powell only noted that the period of high inflation may drag on a little, but eventually the indicator will return to 2%, and Yellen said that by October 18, her department will completely exhaust its resources and then the country will be forced to declare a technical default, since more will not be able to pay bills and finance government structures. However, all these statements were nothing new. Nevertheless, one trading signal was formed during the day - to sell. Moreover, it was formed at the very beginning of the European trading session in the form of a rebound from the extremum level of 1.1704. The pair managed to go down about 30 points during the day, however, it was unable to reach the nearest support level of 1.1666, although it seems to be located close. Thus, a short position was not closed by Take Profit, but it was closed by Stop Loss, which should have been set at breakeven as soon as the price went down 15 points.
Overview of the EUR/USD pair. September 29. Christine Lagarde charges the markets with her calmness.
Overview of the GBP/USD pair. September 29. Complete chaos in the UK. The pound fell like a stone.
EUR/USD 1H
You see that the euro/dollar pair continues to be in a weak downward trend on the hourly timeframe. The decline in quotes is very sluggish, although in the chart everything looks like a full-fledged downward trend. Since the level of 1.1704 was nevertheless overcome, we are now considering the possibility of a further advance of the pair to the downside. In any case, you should not buy the pair before the quotes settle above the trend line. We highlight the following levels for trading on Wednesday - 1.1612, 1.1666, 1.1704, 1.1750, 1.1805, as well as the Senkou Span B (1.1764) and Kijun-sen (1.1714) lines. The Ichimoku indicator lines can change their position 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. One more speech by Lagarde on September 29, as well as Powell's speeches, can be distinguished from the important events. Potentially, these are again very important events, but everything will depend on what the high-ranking officials say. As we saw yesterday, neither Powell nor Lagarde is willing to share new information with the markets. Therefore, there was no reaction to their speeches. Thus, it is likely that these events will not leave any imprint on the chart of the EUR/USD pair today.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The mood of non-commercial traders became less bullish again during the last reporting week (September 14-20). This is eloquently signaled by the green line of the first indicator, which is responsible for displaying the net position of the "non-commercial" group of traders. Thus, the most important category of traders at this time continues to look towards short positions on the euro in the medium term. Nevertheless, they have not been able to go beyond the "zero line" for several weeks already. Thus, their sentiment does not change to bearish, and the pair cannot overcome the 1.1700 level. Consequently, everything rests not only on the level of 1.1700, but also on the mood of big traders who have been very reluctant to sell the euro in recent weeks. It is also clearly seen that their net position has been declining for a long time (second indicator), but at the same time it cannot become negative. As a result, the pair has been trading in the range of 1.1700 - 1.2300 for about nine months. While facing the horizontal channel, the movement for this period of time can not be called flat.
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.
The material has been provided by InstaForex Company - www.instaforex.com