EUR/USD – 1H.
Hello, traders! The euro/dollar pair performed a reversal in favor of the European currency on the hourly chart on May 25 and started the growth process. There are no new graphic shapes or constructions on the chart right now. Thus, the first auxiliary graph is not particularly informative at this time. Meanwhile, a new conflict is breaking out between America and China, and it is this conflict that is now being covered in all the media. If initially, Washington's claims to Beijing consisted of spreading the coronavirus, hiding important information, lying to WHO and the world, now a new conflict has arisen over Hong Kong. Let me remind you that the United States and some other major countries support the independence of the autonomous region and its democracy. This, of course, is not agreed by China, which wants Hong Kong to be completely under its jurisdiction and make as few independent decisions as possible. China is considering a bill that will be designed to control what is happening in Hong Kong more tightly, and America is going to impose sanctions against China because of the adoption of this law. In addition to the sanctions and measures that are being prepared "for" the coronavirus.
EUR/USD – 4H.
On the 4-hour chart, the quotes of the euro/dollar pair, after rebounding from the horizontal trend line, continue the process of falling in the direction of the corrective level of 23.6% (1.0840) and the ascending trend line. Thus, the euro/dollar pair continues to be traded by traders in a very narrow range from which it has not been able to get out for a long time. The rebound of the pair's exchange rate from the level of 23.6% or the upward trend line will work in favor of the EU currency and the beginning of the growth of quotes back to 1.0964 and the horizontal trend line. Fixing quotes under the upward trend line will increase the chances of the pair continuing to fall towards the next corrective level of 0.0% (1.0638).
EUR/USD-Daily.
On the daily chart, the euro/ pair rebounded from the Fibo level of 38.2% (1.0965) and began the process of falling in the direction of the corrective level of 23.6% (1.0840). The 4-hour chart is more accurate and informative now, so I recommend considering it first.
EUR/USD – Weekly.
On the weekly chart, the euro/dollar pair continues to trade near the bottom line of the "narrowing triangle". The rebound of quotes from this line still allows us to expect some growth in the long term in the direction of the level of 1.1600 (the upper line of the "triangle"). Closing the pair under the "triangle" will work in favor of the US currency and a new, possibly long fall.
Overview of fundamentals:
On May 25, the European Union and the United States did not have any economic reports or important news. The world continues to closely monitor the controversy between Washington and Beijing, waiting for the beginning of the "cold war".
News calendar for the United States and the European Union:
US - consumer confidence indicator (16:00 GMT).
No news or reports are scheduled for May 26 in Europe, and only a consumer confidence indicator is planned for America. Thus, today the information background will again be absent.
COT (Commitments of Traders) report:
The latest COT report again showed not too big changes compared to the previous one. The total number of long contracts decreased by 294, while short contracts increased by 970. Given that the total number of contracts included in the report is more than 1,000,000, these changes are minuscule. We are more interested in the "Non-commercial" group and its changes. According to this graph, major players continued to get rid of long contracts and increase short during the reporting week. Thus, market participants who are engaged in this activity professionally, in order to make a profit, believe that the euro currency will continue to fall. Although the total number of long contracts remains almost twice as large as short, in recent weeks there has been a tendency to reduce the gap, which means that the mood of traders is changing to "bearish".
Forecast for EUR/USD and recommendations for traders:
I suggest that new sales of the euro currency be made after the pair closes under the upward trend line on the 4-hour chart with the goal of 1.0638. I recommend that you buy the pair after the quotes break off from the upward trend line or the level of 23.6% with the goals of 1.0964 and 1.0988.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but to ensure current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
