The EUR / USD pair on April 21 was again quite calm, and the volatility was again rather low. Thus, under such conditions, in principle, it was very difficult to expect a large number of trading signals. The pair continues to correct after gaining about 400 pips in two weeks, but corrections are rarely rapid. And the fact that in two weeks the pair went up only 400 points (that is, 40 points a day) suggests that volatility has remained weak in principle lately. Thus, this week remains not the most successful in terms of trading in the EUR / USD pair. In the Asian trading session, as usual, there was an open flat. With the beginning of the European trading session, the downward movement started the day before has resumed. However, no signals were formed, since the price did not work out a single extreme level. The support level 1.2028, which was previously a resistance level, is not extreme, so we do not wait for signals to form around it. Further, the quotes of the pair dropped to the critical line (1.2011) and began to trade openly sideways, going 5-6 points either above the Kijun-sen line, then below it. Thus, neither a clear rebound, nor a clear overcoming of the Kijun-sen line took place during the day. Therefore, not a single deal was opened on April 21. Also, during the day, not a single important macroeconomic report was published, there was not a single fundamental event. Nothing at all. Thus, at this time, the bulls just took a little respite. Most likely, the movement to the North will recover.
On the hourly timeframe, you can clearly see how the pair worked perfectly at the level of 1.2073, after which a correction began, which had been brewing for several days. We continue to draw the attention of traders that the pair may well move without any statistics or “foundation”. Thus, technical factors come first. The pound / dollar pair, for example, ignores macroeconomic data altogether, so now we need to build on global factors that we regularly analyze in fundamental reviews, as well as on the technical picture. We still recommend trading from important levels and lines that are indicated on the hourly timeframe. The nearest important levels are 1.1951, 1.1988 and 1.2081, 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. On Thursday, the European Union is scheduled to summarize the results of the meeting of the European Central Bank, as well as a press conference with Christine Lagarde. We, of course, do not expect any important information or any changes in the parameters of monetary policy, however, we recommend not to miss this event. Still, certain information may come in, and the markets may react at least a little to this event.
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.