EUR/USD 5M
The EUR/USD pair calmly continued its upward movement on Tuesday. Moreover, most of it fell during the European trading session, and not on the US one. The European Union published a report on European inflation in the morning, which very predictably continued to accelerate and amounted to 8.6% Y/Y by the end of June. And what else could you expect from the indicator if the European Central Bank continues to be inactive? It seems that this is exactly what traders decided in the morning, because the strengthening of the euro began early in the morning, four hours before the report was released. And after its release, the upward movement stopped, which eloquently shows the completeness of this report by that time. Thus, the euro/dollar pair has been growing for the fourth consecutive day, which could be a great start to a new upward trend, if not for one "but". There are good reasons to assume that all the current movement is working out the results of the ECB meeting, which will be held on Thursday. Of course, no one knows these results thoroughly yet, but the market can work out the rate hike in advance, since no one doubts it anymore. Consequently, on Thursday, the pair may already fall after the ECB announces a tightening of monetary policy.
But everything is still bad in regards to trading signals. Due to the small number of levels in the current price area, no signals were formed on Tuesday. It's a pity, because yesterday's movement was very good and could bring considerable profit to traders.
COT report:
Commitment of Traders (COT) reports on the euro over the past six months have raised a huge number of questions. The chart above clearly shows that they showed a blatant bullish mood of commercial players, but at the same time, the euro was falling. At this time, the situation has changed, and NOT in favor of the euro. If earlier the mood was bullish, but the euro was falling, now the mood has become bearish and... the euro is also falling. Therefore, for the time being, we do not see any grounds for the euro's growth, because the vast majority of factors remain against it. During the reporting week, the number of long positions increased by 100, and the number of shorts in the non-commercial group increased by 8,500. Accordingly, the net position decreased again, by almost 8,500 contracts. The mood of the big players remains bearish and has even increased slightly in recent weeks. From our point of view, this fact very eloquently indicates that at this time even commercial traders do not believe in the euro. The number of longs is lower than the number of shorts for non-commercial traders by 25,000. Therefore, we can state that not only the demand for the US dollar remains high, but also the demand for the euro is quite low. This may lead to a new, even greater fall of the euro. In principle, over the past few months or even more, the euro has not been able to show even a tangible correction, not to mention something more. The highest upward movement was about 400 points.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. July 20. The time has come for the ECB to take the inflation problem seriously.
Overview of the GBP/USD pair. July 20. Election of the prime minister of Great Britain: four candidates remain.
Forecast and trading signals for GBP/USD on July 20. Detailed analysis of the movement of the pair and trading transactions.
EUR/USD 1H
It is no longer possible to say that the downward trend continues on the hourly timeframe. The pair went up by as much as 300 points. Of course, the euro's growth may well end on Thursday, and the price has not yet been able to overcome the Senkou Span B line, which is the upper limit of the Ichimoku cloud. However, if this line is broken, traders will have the right to expect further growth in the short term. We highlight the following levels for trading on Wednesday - 1.0000, 1.0072, 1.0120, 1.0340-1.0366, 1.0485, as well as Senkou Span B (1.0243) and Kijun-sen (1 .0109). Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. There are also secondary support and resistance levels, but no signals are formed near them. Signals can be "rebounds" and "breakthrough" extreme levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price has gone in the right direction for 15 points. This will protect you against possible losses if the signal turns out to be false. There are no important publications or events scheduled in the US and the EU on July 20. However, this does not mean at all that the pair will stand still all day. The last few days have shown that volatility remains high and trend movement is present.
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.
