EUR/USD 5M
The EUR/USD pair continued its downward movement on Wednesday, which began the day before. Thus, in total, the pair lost about 170 points in two days and... just dropped from the upper border of the horizontal channel to the lower one. Consequently, nothing has changed in the technical picture of the euro/dollar pair, the price still continues to move (albeit very volatile) within a limited price range. Note that the European Union and the United States published indexes of business activity in the service sector on Wednesday. If traders were not interested in the European index due to its neutrality, then the ISM index, which turned out to be much better than forecasts, provoked a new growth of the US currency. Its value was 56.7 points while the forecast was 52.5. Interestingly, another business activity index in the services sector (S&P) fell to 47 points, so it's even difficult to say what is happening with this area: is it shrinking or growing? Very strange data... But in any case, whether the dollar rose or fell, what difference does it make if the pair is still inside the horizontal channel?
As for trading signals, it was almost a perfect day. The critical line rose to 1.0204 during the day and it met the price exactly at this point. An ideal rebound and a drop of almost 100 points to the extreme level of 1.0120, to which the price did not reach literally 3 points. However, this "under-rebound" happened in the evening, so somewhere in this area, traders in any case should have tuned in to leave the transaction. Thus, it was possible to earn about 40-50 points on it. But the buy signal, most likely, should not have been worked out, since it was formed rather late in time.
COT report:
Commitment of Traders (COT) reports on the euro over the past six months have raised a huge number of questions. The chart above clearly shows that for most of 2022 they showed a blatant bullish mood of commercial players, but at the same time, the euro was falling. The situation has changed at this time, but NOT in favor of the euro. If earlier the mood was bullish, but the euro was falling, now the mood is bearish and... the euro is also falling. Therefore, for the time being, we do not see any grounds for the euro's growth, because the vast majority of factors remain against it. During the reporting week, the number of long positions increased by 2,100, and the number of shorts in the non-commercial group increased by 1,000. Accordingly, the net position increased, but only by 1,000 contracts. The sentiment of the big players remains bearish and has continued to pick up in recent weeks. From our point of view, this fact very eloquently indicates that at this time even commercial traders do not believe in the euro. The number of longs is lower than the number of shorts for non-commercial traders by 41,000. Therefore, we can state that not only the demand for the US dollar remains high, but also the demand for the euro is quite low. This may lead to a new, even greater fall of the euro. In principle, over the past few months or even more, the euro has not been able to show even a tangible correction, not to mention something more. The maximum upward movement was about 400 points.
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EUR/USD 1H
The pair continues to trade between the levels of 1.0120 and 1.0269 on the hourly timeframe. Thus, the flat remains and may continue for some time. The lines of the Ichimoku indicator are not strong now, but, as yesterday showed, strong signals can form around them. There are no changes in the technical picture now. We highlight the following levels for trading on Thursday - 1.0000, 1.0072, 1.0120, 1.0269, 1.0340-1.0366, 1.0485, as well as Senkou Span B (1.0188) and Kijun-sen lines (1.0209). Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. There are also secondary support and resistance levels, but no signals are formed near them. Signals can be "rebounds" and "breakthrough" extreme levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price has gone in the right direction for 15 points. This will protect you against possible losses if the signal turns out to be false. There are no important reports or other events planned in the European Union and the United States for August 4. Thus, traders will be on a "dry ration" during the day. However, the pair may continue to trade in a very volatile manner.
Explanations for the chart:
Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.
Support and resistance areas are areas from which the price has repeatedly rebounded off.
Yellow lines are trend lines, trend channels and any other technical patterns.
Indicator 1 on the COT charts is the size of the net position of each category of traders.
Indicator 2 on the COT charts is the size of the net position for the non-commercial group.
