EUR/USD 5M
The EUR/USD pair just stood in one place last Friday. However, this statement is true not only for Friday, but for the entire previous week. With the exception of one - Thursday, when the European Central Bank summed up the results of its meeting, the pair has been in a narrow horizontal channel with a high of 70 points wide for the entire week. So now is not the best time to work with the EUR/USD pair. As for Friday, the chart clearly shows that the price spent the whole day in a horizontal channel with a width of 30 points, and the total volatility of the day was 33 points. This is not even low, this is minuscule. It is noteworthy that there were still several macroeconomic reports that day. For example, the European Union published indices of business activity in the services and manufacturing sectors for July (preliminary values). These indices have changed just a bit compared to June, so it is quite reasonable that there was no market reaction to them (the number "1" in the chart). Similar indices were also published in America (figure "2" in the chart). In the United States, the index of business activity in the service sector fell quite seriously, reaching 59.8 points. However, this is still a very high value and, as we can see, the markets did not panic because of its decline by 5 points. As for trading signals, only two of them were formed and traders could not earn money on them, since the price simply did not reach the nearest target level, which was not too far away anyway. The price bounced twice from the extreme level of 1.1756. In the first case, a long position was closed at breakeven by Stop Loss, since the price went up 15 points. In the second case, the long position should have been manually closed in the late afternoon, so it was even possible to make a profit of 6-7 points.
EUR/USD 1H
The downward trend reversed as the price broke through the trend line on the hourly timeframe for the EUR/USD pair. However, formally the pair remains in a downward direction, as the breakdown happened on Thursday, when the ECB summed up the results of its meeting. In principle, if you wait for the price to settle above the trend line, then you can talk about the formation of an upward trend more confidently. It should also be noted that the price continues to be inside the horizontal channel, the lower border of which is just at the level of 1.1756, which the price could not overcome at least four attempts. On Monday, we still recommend trading from important levels and lines. The nearest important levels at this time are 1.1704, 1.1756 and 1.1881, as well as the Senkou Span B (1.1822) and Kijun-sen (1.1791) 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. There are no major reports or events scheduled in the European Union on Monday, and a report on durable goods orders will be published in the US. However, we believe that there will be no strong reaction to it, the most is 20-30 points.
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 60 points during the last reporting week (July 13-19). In recent weeks, major players have continued to reduce the number of Buy contracts (longs) and increase sell contracts (shorts). This is clearly seen in the first indicator. The green line (net position of the "non-commercial" group) continues to decline, while the red line (net position of the "commercial" group) continues to grow. Recall that when these two lines move towards each other, it means that the current trend is coming to an end or has already ended. However, we have already repeatedly drawn your attention to the fact that the global injection of cash into the US economy continues, as the Federal Reserve has repeatedly stated. Thus, a rather paradoxical situation turns out: professional traders are selling the euro, but at the same time it is getting very weak and has excellent chances of resuming the upward trend. This is because the money supply in the United States continues to increase and the dollar is now also depreciating due to high inflation and high supply in the foreign exchange market. It turns out to be a situation in which the euro is getting cheaper mostly due to the fact that players are selling it, and the dollar is getting cheaper because of the actions of the Fed and the US government. Consequently, as a result, that currency falls, the rate of reduction in price of which is higher. So far, this is the euro currency. But its decline is very weak. During the reporting week, non-commercial traders opened another 7,000 contracts to sell and closed 5,600 contracts to buy. Thus, their net position decreased by another 12.6 thousand contracts, and the mood became even less bullish. The total number of buy contracts from the non-commercial group is already 210 thousand, and for sale - 162 thousand. More recently, the gap was twofold.
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