EUR/USD - 24H.
The EUR/USD currency pair has increased by 80 points during the current week. Thus, the upward movement has been continuing for two weeks in a row. And if it were not so weak, it would be possible to say with confidence that a new upward trend has begun. However, the fact is that the pair has been growing for 11 days. However, at the same time, it managed to grow by only 200 points. Once again, we remind traders that at the moment, the movements look convincing and powerful in the illustration of the 24-hour timeframe. However, this is not the case. If you set the scale of the chart so that the entire one-and-a-half-year upward trend falls on it, it becomes clear that all the movements over the past 6 months are nothing more than weak corrections against this trend. Thus, at this time, we can only draw the same conclusion as before. The chances of a new fall in the US currency with a minimum target of 1.2240 are very high. It is supported by a whole set of fundamental and technical factors. However, with such volatility, the pair can even reach the level of 1.2240 for six months. We believe that at this time the global upward trend should resume, within which the quotes should go much higher than the level of 1.2240. And this task looks even more impossible, given the current volatility. It is on volatility that traders should now focus their attention on. A striking example: on Friday, the Nonfarm Payrolls report was published in the United States, which at all times was considered one of the most significant; the actual value was three times lower than the forecast and at the same time the volatility of the day was 45 points. 45 points are considered a very weak value even when the macroeconomic and fundamental backgrounds are empty. And with such an important report, and even with such a discrepancy with the forecast, it's just a meager amount. And we have not yet taken into account all the other statistics, which were plentiful on Friday.
COT report.
During the last reporting week (August 24-30), the EUR/USD pair increased by 50 points. However, although the European currency has been growing for two weeks, COT reports continue to signal a reduction in the net position of non-commercial traders, which can only indicate a weakening of the "bullish" mood. The net position of the "Non-commercial" group has already fallen to almost zero, which means that there is almost complete equality in the number of open contracts for buying and selling by large players. If we make the most banal conclusion, then the major players are now looking towards the sale of the European currency. But, as we have repeatedly said, during such a serious weakening of the "bullish" mood, the euro/dollar pair fell by only 600 points. Recall that the entire upward trend is estimated at 1,700 points. Thus, so far, we can only draw the same conclusion as before: the major players may be set up for the sale of the euro, but the monetary injections from the Fed, which have not yet stopped, continue to level the imbalance in supply and demand for the European currency. Simply put, the Fed continues to pour hundreds of billions of dollars into the economy, banally increasing the supply of the dollar in the foreign exchange market and provoking an increase in inflation. Therefore, professional players can sell the euro, but the dollar's money supply is growing at about the same rate (or even more), which leads to a very modest fall in the euro currency against the dollar, which can end at any time. During the reporting week, the Non-commercial group opened 11 thousand new contacts for sale, and the total number of buy and sell contracts is now in the ratio of 192.5 thousand-180.5 thousand.
The current trading week was extremely busy in macroeconomic terms. However, since the volatility remained minimal, there were no significant changes in the technical picture, thanks to all these reports and publications. By and large, we can call important the report on European inflation, which unexpectedly jumped from 2.2% to 3.0% y/y in August, as well as Nonfarm Payrolls, which turned out to be three times lower than the forecast value and amounted to only 235 thousand. However, the markets did not react to either report. Of particular importance is only the Nonfarm report at all, since its low value significantly reduces the probability of announcing the beginning of the curtailment of the Fed's quantitative stimulus program at the meeting in September.
Trading plan for the week of September 6-10:
1) On the 24-hour timeframe, the trend changes to an upward one. The price has overcome the critical Kijun-sen line, so now it will tend to the upper border of the Ichimoku cloud. Unfortunately, the bulls failed to overcome the level of 1.1910, which is the previous local maximum, on the first attempt. However, we believe that this is only a temporary phenomenon. The nearest target for the next week will be the level of 1.2000. We advise you to consider buying a pair
2) The euro/dollar pair has consolidated above the critical line, so the further downward movement is still in doubt. However, we have repeatedly said that we expect the completion of the downward correction movement around the level of 1.1700. In any case, as long as the price is above the Kijun-sen line, it is not worth returning to sales.
Explanations to the illustrations:
Price levels of support and resistance (resistance/support) – target levels when opening purchases or sales. Take Profit levels can be placed near them.
Ichimoku indicators, Bollinger Bands, MACD.
Support and resistance areas – areas from which the price has repeatedly bounced earlier.
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.
