M5 chart of EUR/USD
During the last trading day of the week, the euro/dollar pair entered a bearish correction after a steep growth of the past several days. As a reminder, the price settled below the ascending trend line. However, it failed to settle below the Senkou Span B, and later on the euro also returned above the critical line. But it failed to update its local high of November 15, which suggests that the downtrend was cut short, which is now far from being evident. Nevertheless, we could anticipate a correction because the uptrend line has been crossed. There were no important and high-profile events in the EU and the U.S. on Friday, as well as during most of the past week. It may well be that the euro's growth was not quite logical again (although the right reasons can be "found", of course), so we still expect the EUR/USD to go down.
There is not much to say about Friday's technical signals, since there was only one throughout the day. At the beginning of the US session, the pair rebounded from the 1.0366-1.0340 area, so traders could open long positions there. It hardly made much profit, but you could earn around 20-30 pips, which is not bad either, considering the weak volatility and since there was almost no trend.
As for Commitment of Traders (COT) reports in 2022, they reflected bullish sentiment in the first six months of the year although the euro was bearish. Then, they illustrated bearish sentiment for several months with the euro being also bearish. Currently, the net position of non-commercial traders is again bullish and increasing. Meanwhile, the euro has hardly retreated from its 20-year lows. This is due to the fact that demand for the greenback is high amid a difficult geopolitical situation in the world. Therefore, despite a rise in demand for the euro, buoyant demand for the dollar does not allow the euro to strengthen. During the reporting week, the number of long positions held by non-commercial traders rose by 7,000 and that of short positions increased by 2,000. Consequently, the net position advanced by 5,000. The euro's recent growth is gradually coming in line with the figures illustrated in the COT report. Still, the greenback may resume growth under the influence of geopolitical factors or the lack of factors for further strengthening in the euro. The green and red lines of the first indicator moved far away from each other, which may indicate the end of the uptrend. The number of long positions exceeds that of short positions by 113,000. Therefore, the net position of non-commercial traders may continue to rise further, but without triggering a similar rise in the euro. When it comes to the total number of longs and shorts across all categories of traders, there are now 39,000 more short positions (635,000 vs 596,000).
H1 chart of EUR/USD
In the H1 time frame, EUR/USD tried to resume the uptrend, but stopped just before it updated its previous local high. Although the price broke through the trend line, fundamental factors provide little support for the euro, the market has not yet found any reason to sell, which we are waiting for. Anyway, we are still anticipating a strong bearish correction. On Monday, the pair may trade at the following levels: 1.0124, 1.0195, 1.0269, 1.0340-1.0366, 1.0485, 1.0579, 1.0637, as well as Senkou Span B lines (1.0207) and Kijun Sen (1.0336). Lines of the Ichimoku indicator may move during the day, which should be taken into account when determining trading signals. There are also support and resistance levels, but signals are not formed near these levels. Bounces and breakouts of the extreme levels and lines could act as signals. Don't forget about stop-loss orders, if the price covers 15 pips in the right direction. This will prevent you from losses in case of a false signal. On November 28, European Central Bank President Christine Lagarde will give a speech; however, all of the central bank's representatives are now in favor of further rate hikes, which traders are absolutely ready for. Lagarde may have something important to say (in theory) but the market is probably ready for that. Nothing of interest in America.
What we see on the trading charts:
Price levels of support and resistance are thick red lines, near which the movement may end. They do not provide trading signals.
The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, moved to the one-hour chart from the 4-hour one. They are strong lines.
Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals.
Yellow lines are trend lines, trend channels, and any other technical patterns.
Indicator 1 on the COT charts reflects the net position size of each category of traders.
Indicator 2 on the COT charts reflects the net position size for the non-commercial group.