The EUR / USD pair on April 20 was trading much more calmly than on Monday. Despite the fact that nothing has changed at all in fundamental and macroeconomic terms, the nature of the pair’s movement has changed to the opposite. If on Monday the quotes just went up ahead, then on Tuesday they began to correct. And all this in the complete absence of any news and macroeconomic information. We have already repeatedly said in our articles (especially fundamental ones) that at this time only two factors affect the EUR / USD pair: technical and fundamental. And so far, the movement of the pair is fully consistent with these factors, which speak in favor of the fact that the global upward trend will continue. Thus, whether there is news and reports or not, the main thing is that the overall picture of the state of affairs corresponds to our expectations. On Tuesday, very few signals were formed during the day. If on Monday traders could do a good job in the foreign exchange market, then on Tuesday there was practically nothing to do there. The upward movement began during the Asian trading session, and by the beginning of the European one it was already in full swing. The price very quickly worked out the next resistance level at 1.2073 and bounced off it. However, this level is not an extreme, so it does not generate signals. Therefore, it was necessary to wait for the level of 1.2108 or 1.2042 to be worked out. These were the closest levels around which signals could form. The level of 1.2042 was worked out at the very beginning of the American session and generated a sell signal, but the bears were too weak for the pair to continue moving down. After the formation of a sell signal, the quotes did not go down 15 points, so it was not possible to set Stop Loss to breakeven. As a result, the trade was closed at a loss of 10 points, as the pair consolidated back above the level of 1.2042, thus forming a buy signal. However, the upward movement also did not continue, therefore, it was not possible to earn money on this deal either.
On the hourly timeframe, you can clearly see how the pair perfectly worked out the level of 1.2073, and then the level of 1.2028. The extremum level 1.2081 has already formed today – this is the maximum of yesterday. Thus, now we can say that the pair has only slightly corrected and failed to even reach the critical line in its correction. Therefore, the upward movement can resume at any time. On Wednesday, April 21, there will again be no important event or report in the European Union and the United States. Thus, when making trading decisions, you will still have to rely solely on technical signals. The beginning of this week, however, showed that traders absolutely do not need a foundation or statistics to stick to the “general plan”. We still recommend trading from important levels and lines that are indicated on the hourly timeframe. The nearest important levels are 1.1988, 1.2081 and 1.2108, as well as the Kijun-sen line (1.2011). Signals can be “bounces” and “overcoming” 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 data from the COT reports assumed the end of the uptrend as early as 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.
Kijun-sen and Senkou Span B lines – the lines of the Ichimoku indicator, 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.