The EUR / USD pair “exploded” on April 19 both literally and figuratively. Quotes of the pair started strong growth from the very morning, which remained for most of the day. Active trading was observed even in the Asian trading session. Thus, the market sluggishness last week evaporated over the weekend, and the US dollar rushed down again. We have already spoken about the reasons (more precisely, the causeE) of the depreciation of the US dollar and at the moment nothing has changed at all. Trillions of dollars that are poured into the American economy cannot go unnoticed for the exchange rate of the national currency. Thus, neither “macroeconomics” nor a new “foundation” on Monday was even needed for the US currency to resume its decline. Now let’s see what signals were formed during the day and whether it was possible to make money on such a strong movement. At first glance, you could and should have made money. But in practice, not everything is so simple. The first signal of the day was formed during the Asian trading session – overcoming the extremum level of 1.1951. However, we do not recommend working out night signals, they rarely bring profit. But this time the strong upward movement really began at night, so this signal was correct. Nevertheless, the next signal should have been worked out – overcoming the extremum level of 1.1988. But here, too, everything turned out very ugly. The fact is that there was no clear overcoming of this level from the very first bar. For a couple of 15 minutes it stomped around it, only then it fixed itself 20 points above it. Thus, traders had to open a buy position already at the level of 1.2007. It is worth noting that the price went up 20 points in just 5 minutes. But we still managed to earn 34 points on such a strong movement, since the next nearest level of 1.2042 was worked out. A rebound occurred from it, which should be interpreted as a signal to sell and sell the pair. At the time of this writing, this deal remains open.
On the hourly timeframe, the upward movement looks impressive as well. We clearly see that the uptrend persists and is supported by two uptrend lines at once. In addition, literally in the last article, we said that everything is going according to plan. According to the plan for a further campaign to the North. Thus, the only thing that was unexpected on Monday was the strength of the upward movement, given that no macroeconomic report was published on that day and no important fundamental event took place. On Tuesday, April 20, the European Union and the United States will again not have a single important event or report, however, as we can see, traders do not need statistics with a foundation to continue moving the pair upward, according to the global upward trend. We still recommend trading from important levels and lines that are indicated on the hourly timeframe. The nearest important levels are 1.1988, 1.2042 and 1.2108, as well as the Kijun-sen line (1.1963). Signals can be “bounces” and “breaking” of these levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price moves 15-20 points in the right direction. This will protect against possible losses if the signal turns out to be false.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP / USD pair.
Recall that during the last reporting week (April 6-12), the EUR / USD pair rose by 100 points. Recall that over the past 6 weeks professional traders have been actively reducing Buy contracts and increasing Sell contracts, but the total number of buy contracts from a group of “Non-commercial” traders still remains twice as large as the number of sell contracts. This suggests that sentiment among non-commercial traders remains bullish, but has weakened in recent weeks. The new COT report showed minimal changes. During the reporting week, major players opened 2.2 thousand Buy-contracts and closed 2.2 thousand Sell-contracts. Thus, the net position increased slightly, by 4.4 thousand, that is, the mood of the major players became more “bullish”. We said earlier that the COT report data suggested the end of the uptrend back in September last year. However, from that moment on, the uptrend continued without problems, and now it may resume. This is all due to the same factor of pumping the American economy with money. Let’s ask ourselves: what exactly do COT reports display? They reflect the actions of the whales of the foreign exchange market, those players who make the majority of transactions in the foreign exchange market, that is, move it. However, COT reports do not take into account such a factor as the inflation of the money supply. It turns out to be a paradox: large players can sell off the European currency, but it will still rise in price in the end, since the amount of dollars in the economy and markets is growing. A banal logical chain: the supply grows – the price falls. Therefore, in the last, pandemic year, COT reports do not always accurately reflect what is happening on the market. However, they make it clear how the mood of professional players is changing.
Explanations for illustrations:
Price levels of support and resistance (resistance / support) – levels that are targets when opening purchases or sales. You can place Take Profit levels near them.
The Kijun-sen and Senkou Span B lines are the Ichimoku indicator lines transferred to the 1-hour timeframe from the 4-hour timeframe.
Support and resistance areas are areas from which the price has repeatedly bounced off.
Yellow lines – 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.