EUR/USD - 24H.
The EUR/USD currency pair has lost only 15 points this week, despite the most important event – the Fed meeting. There were no changes at all. Moreover, the volatility of the pair was again quite weak and did not correspond to the nature of those fundamental events. Thus, the pair's quotes again fell to the level of 1.1700, near which there has already been an upward turn several times. From a technical point of view, the level of 1.1700 is of great importance. The fact that the price has already failed to overcome it at least three times indicates a very likely new upward reversal. Moreover, the Fed has not decided to curtail the quantitative stimulus program, which means that the US dollar has lost market support. But, on the other hand, each subsequent rebound from the level of 1.1700 was less than the previous one, which indicates the weakness of the bulls. Thus, the pair remains in the "border zone". Overcoming the level of 1.1700 can open up new prospects for bears, who can rush to at least the 16th level. At the same time, another unsuccessful attempt to overcome 1.1700 may provoke a powerful growth of the pair to the highs of the year. Unfortunately, the fundamental background does not answer the question of what to expect from the pair in the coming months. The Fed and the ECB will likely reduce their stimulus programs (QE and PEPP) at about the same time. Thus, the volume of printed money entering the US and EU economies will decrease approximately equally. From this point of view, the US dollar is again losing long-term support. Therefore, we are paying more attention to technology for now. And the technique now suggests that the downward trend continues, but is weakening. Traders failed to gain a foothold above the Ichimoku cloud, but they also cannot overcome the level of 1.1700. Thus, it will be possible to consider medium-term purchases of the pair no earlier than the consolidation of quotes above the Kijun-sen line and the Ichimoku cloud.
The COT report.
During the last reporting week (September 20-24), the mood of non-commercial traders again became "less bullish". It is eloquently signaled by the green line of the first indicator, which is responsible for displaying the net position of a group of "Non-commercial" traders. Thus, the most important category of traders at this time continues to look towards the sale of the European currency in the medium term. However, they have not been able to go beyond the "zero lines" for several weeks. Thus, their mood does not change to "bearish", and the pair cannot overcome the level of 1.1700. Therefore, everything depends on the level of 1.1700 and also on the mood of large traders who have been very reluctant to sell the euro currency in recent weeks. It is also clearly visible that their net position has been declining for a long time (the second indicator), but it cannot become negative. As a result, the pair has been trading in the range of 1.1700-1.2300 for about 9 months. On the face of the side channel, although the movement for this period can not be called "flat".
This trading week, all the attention of traders was directed to the Fed meeting. However, the US central bank disappointed traders. The forecast for the economy for 2021 was lowered, and no reduction in the QE program was announced. Thus, the US dollar simply did not get new grounds for growth. Nevertheless, there are hints in Jerome Powell's rhetoric about a possible curtailment of the QE program in November or December. The corresponding decision will be made at the next meeting. The markets paid almost no attention to the indices of business activity in the services and manufacturing sectors of the United States and the EU, which were published on Thursday. Nevertheless, it is worth noting that these reports showed a rather serious decline in business activity in the European Union. It seems that we are again talking about a decrease in the pace of economic recovery and the reason may be the "coronavirus" and a new wave of diseases in European countries. Especially now, when the colder time of the year has come.
Trading plan for the week of September 27 – October 1:
1) On the 24-hour timeframe, the upward trend has not changed, since the bulls failed to develop success and overcome the level of 1.1886. At the moment, the quotes have fallen below the critical line, as well as below the Ichimoku cloud, and continue their downward movement. Thus, at this time, the pair's sales are more relevant, which could already be opened when the price was fixed below the critical line. If the bears manage to overcome the 17th level, then it will be possible to stay in sales with the target of 1.1602.
2) As for the purchases of the euro/dollar pair, we still believe that the global upward trend can be resumed. But at the same time, there are no technical signals now. At a minimum, you need to wait for a new consolidation of quotes above the Kijun-sen line and only then consider the possibility of buying the pair.
Explanations to the illustrations:
Price levels of support and resistance( resistance/support), Fibonacci levels – target levels when opening purchases or sales. Take Profit levels can be placed near them.
Ichimoku indicators(standard settings), Bollinger Bands(standard settings), MACD (5, 34, 5).
Indicator 1 on the COT charts – the net position size of each category of traders.
Indicator 2 on the COT charts – the net position size for the "Non-commercial" group.
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