EUR/USD 5M
The EUR/USD pair, very unexpectedly for many, fell by 120 points on Tuesday. However, it still remains inside the horizontal channel of 1.0120-1.0269. Yes, this channel cannot be considered narrow, but at the same time it is still a horizontal channel, and the price just dropped to its lower border. And at the same time to the Senkou Span B line, which is now a powerful support. Thus, the euro can still count on growth, but we still believe that the global downward trend will resume. The Federal Reserve will announce the results of its meeting tonight, and we will probably see a rate hike of 0.75-1.00%. In any case, whatever such an increase would be a serious tightening of monetary policy, to which the market is obliged to respond with long positions on the US currency. There was not a single important report or other event in the European Union and the United States on Tuesday that could provoke such a strong fall. Therefore, we believe that the market has already begun to work out the future Fed rate hike.
As for trading signals, there were several of them. There were also false ones. The very first signal to buy - a rebound from the critical line - turned out to be false, since the price after its formation could not go up even 10 points. That's why the traders got a small loss on the long position – in half an hour the pair settled below the Kijun-sen. This was followed by a powerful fall to the level of 1.0120 and the Senkou Span B line, from which the price bounced three times in total, each time forming a buy signal. Therefore, short positions should have been closed and long positions should have been opened, which did not bring profit, since the pair each time returned to the indicated benchmarks. But Stop Loss could be placed on longs, so the total profit of the day was about 40 points.
COT report:
The 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 for most of 2022 they showed an openly bullish mood of professional players, but at the same time, the euro was falling at the same time. 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 decreased by 1,300, while the number of shorts in the non-commercial group increased by 16,000. Accordingly, the net position decreased again, by almost 15,000 contracts. The mood of the big players remains bearish and even intensifies in recent weeks. From our point of view, this fact very eloquently indicates that at this time even professional traders do not believe in the euro. The number of longs is lower than the number of shorts for non-commercial traders by 43,000. Therefore, we can state that not only does the demand for the US dollar remain high, but that 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 27. Today - what everyone has been waiting for - the Fed meeting.
Overview of the GBP/USD pair. July 27. Rishi Sunak and Liz Truss held a pre-election debate. Truss won.
Forecast and trading signals for GBP/USD on July 27. Detailed analysis of the movement of the pair and trading transactions.
EUR/USD 1H
The pair keeps moving inside the horizontal channel on the hourly timeframe. Yesterday the movement was very good, but if the pair continues to trade inside the channel, then not every day can be as pleasant. Therefore, everything now depends on whether or not to overcome the Senkou Span B line. We allocate the following levels for trading on Wednesday - 1.0000, 1.0072, 1.0120, 1.0269, 1.0340-1.0366, 1.0485 , as well as the Senkou Span B (1.0111) and Kijun-sen (1.0194) lines. 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. No important events or publications are scheduled in the European Union again on July 27. However, in the United States, a report on orders for durable goods will be published during the day, and the results of the Fed meeting will be announced in the evening. Therefore, the pair can be traded at low volatilely. But there are doubts about the trend.
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.
