M5 chart of EUR/USD
EUR/USD did not show any interesting movements on Thursday. The price was still moving slightly above the critical line, and the entire movement still looks more like a flat than a trend. The pair surged at the beginning of this week, which many regarded as resumption of the uptrend. Actually, the price has simply moved into a horizontal channel just above the previous one. Therefore, we are dealing with a non-standard flat. Yesterday, there were some interesting reports in America. As we mentioned in our fundamental articles, all the four reports, which traders may find interesting, were better than forecasts, some of them turned out to be even better. However, the U.S. currency failed to benefit from it. In particular, the GDP report showed the economy growing at 2.9%, not 2.6% as estimated. But the market still refuses to buy the dollar.
Thursday's trading signals were average. There were two signals near the 1.0864-1.0868 area, which could be taken as a rebound, but it was so inaccurate... Thus, traders could open a short position first and then a long position. There was a loss on the first trade, as the price failed to pass even 15 points in the right direction, and a small profit on the second trade, which made it possible to offset the loss on the first trade.
The COT reports for the euro in the last few months have been fully consistent with what is happening in the market. You can clearly see on the chart that the net position of big players (the second indicator) has been growing since early September. Around the same time, the euro started to grow. At this time, the net position of the non-commercial traders has been bullish and strengthens almost every week, but it is a rather high value that allows us to assume that the uptrend will end soon. Notably, the green and red lines of the first indicator have moved far apart from each other, which often precedes the end of the trend. During the given period, the number of long positions held by non-commercial traders decreased by 10,300, whereas the number of short positions fell by 2,300. Thus, the net positions decreased by 8,000. Now the number of long positions is higher than the number of short positions opened by non-commercial traders by 127,000. From a technical perspective, a bearish correction should have started a long time ago. In my opinion, this process can not continue for another 2 or 3 months. Even the net position indicator shows that we need to "unload" a bit, that is, to correct. The overall number of short orders exceeds the number of long orders by 52,000 (711,000 vs. 659,000).
H1 chart of EUR/USD
The technical picture on the one-hour chart remains unchanged. We can see that the pair maintains the bullish sentiment, and is located above the lines of the Ichimoku indicator. However, the pair was mostly flat, whether there was macro data or not. Thus, the euro can not rise, but it is not willing to fall as well. It looks like everything will be decided next week. We have set the last value of the Ichimoku indicator lines, because it can merge during a flat and can also be very weak. On Friday, the pair may trade at the following levels: 1.0658-1.0669, 1.0736, 1.0806, 1.0868, 1.0938, 1.1036, 1.1137 and also Senkou Span B lines (1.0825) and Kijun Sen (1.0854). 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 January 27, the EU will host another speech by European Central Bank President Christine Lagarde, of which there have been 4 or 5 over the past two weeks, and there will be several reports in America, not the most important ones.
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.