EUR/USD 1H
The euro/dollar pair perfectly reached the Senkou Span B line on the hourly timeframe of August 20, which, let me remind you, is the most important and strong line of the Ichimoku indicator. So the price reached it and rebounded. Thus, the bears' fuse dried up very quickly. And now, in order for the US dollar to continue to rise in price, it is necessary for sellers to keep the pair through the Senkou Span b line. However, now the most interesting question is whether yesterday's fall was an accident? We have already concluded yesterday that traders of both major pairs just started taking profits, which resulted in the simultaneous fall of both the euro and the pound. However, both pairs stopped falling today, and the pound sterling has jumped at a breakneck speed. Thus, both pairs may soon return to the upward trend.
EUR/USD 15M
Both linear regression channels turned down on the 15-minute timeframe, but this still did not help the quotes to continue falling. The last available Commitment of Traders (COT) report was released last Friday. According to this report, non-commercial traders reopened Buy-contracts and closed Sell-deals. Thus, the net position for the "non-commercial" category of traders, which is the most important and significant category of traders, has grown again, this time by 15,000 contracts, which is a high value (5,128 Buy-contracts were opened and 9,681 Sell-contracts were closed). Hence, the conclusion is that the mood of big traders has not changed at all over the past week. In principle, the same conclusion can be drawn by looking at the chart of the euro/dollar currency pair. The pair has been in the side channel since July 27, that is, for three weeks, after which the upward movement resumed. During all this time, traders managed to adjust the pair by a maximum of 200 points down, which is very little to be reflected in the COT report. The euro only began to fall in price the day before yesterday,, which gives reason to assume the end of the upward trend. If in today's COT report we see non-commercial traders sharply reducing Buy-contracts, or an increase in the number of Sell-contracts, it will show that their mood is beginning to change in favor of a bearish one.
The fundamental background for the EUR/USD pair was extremely contradictory on Thursday. There are a lot of rumors on the market now, but there are practically no facts. Let's start with the fact that yesterday the media leaked information that Republicans and Democrats began to conduct almost secret talks on a new package of financial assistance to the US economy. Furthermore, it was also reported yesterday that China and the United States have begun preparing for new talks on trade relations. In both cases, the participants in the negotiation process did not want to advertise the upcoming dialogues. And this is the main doubt that this information is true. Of course, this may be the case in reality, but what is confidential? Germany, the European Union and the United States will publish business activity indices in the services and manufacturing sectors on Friday. We believe that there will not be much reaction to these reports, as they are highly likely to exceed the 50.0 level, above which the corresponding area is considered to be growing.
Based on the above, we have two trading ideas for August 21:
1) Bulls temporarily abandoned further purchases of the pair and began to take profits. The pair dropped to the Senkou Span B line and stopped. Thus, in order for the upward trend to resume, the quotes must return to the area above the 1.1886-1.1910 range. In this case, we will recommend buying the euro again with targets at the levels of 1.1958 and 1.2051. Take Profit in this case will be from 40 to 120 points.
2) Bears finally seized the initiative in the market and began to attack. However, so far more and more depends on the bulls, which simply closed part of the longs. Nevertheless, we recommend to continue selling the pair with the target of the support level of 1.1745 if sellers manage to overcome the Senkou Span B line (1.1812). The potential Take Profit in this case will be about 50 points.
Hot forecast and trading signals for the GBP/USD pair.
We recommend that you also explore the fundamental background in these articles:
Overview of the EUR/USD pair. August 21. FOMC minutes: nothing interesting. US tech giants do not benefit from Trump becoming president a second time. The war with China will continue.
Overview of the GBP/USD pair. August 21. Ongoing Brexit talks. Boris Johnson will have to rebuild the economy and keep Northern Ireland and Scotland as part of Britain.
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.
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