The EUR / USD pair was trading on April 28, as if reluctantly. We have noted rather weak volatility for several days in a row. Naturally, in such conditions it is very difficult to work, open deals and make a profit. Thus, traders had to take into account the fact that volatility is very low. We have talked about this many times in our articles. If the pair goes from a minimum to a maximum of 40 points per day, how much can you earn on this movement? 20 points and even then, provided that the entire movement of 40 points will be fast, and not stretch for 24 hours. Naturally, nothing of the kind was observed during the third trading day of the week. Throughout the European trading session, the pair’s quotes were in a side channel 23 points wide. Any further comments on how the euro / dollar traded on Wednesday? We did not add this side channel to the illustration, as during the European session the pair even managed to form two relatively strong signals. Both are bounces from the extremum level of 1.2076. However, in the course of their development, even the nearest line of Kijun-sen, which was located only 15 points, did not manage to reach the price. So, judge for yourself whether you should have entered the market at all? We believe that one should not, or at least should have closed trades at zero in the manual mode, since the probability of a weakly volatile flat was very high. In the American trading session, things went a little more fun. At 14-00 GMT, Christine Lagarde’s speech began (figure “1”), after which the price immediately went up, that is, the European currency began to rise in price. The chairman of the ECB did not say anything very important, only that by June, up to 70% of the population of the European Union will receive at least one dose of the vaccine, nevertheless, the markets reacted with purchases of euros. Around the same time, a new buy signal was formed, which should not have been worked out. Not only was it formed during Christine Lagarde’s speech, but also a few hours before the most important event – summing up the results of the Fed meeting and a press conference with Jerome Powell. All subsequent signals did not make any sense to consider at all. We do not recommend opening deals during important fundamental events.
On the hourly timeframe, a “swing” began, but below the critical line of the Kijun-sen, traders failed to consolidate the pair. Thus, formally, we have a correction, but at the same time the price is located at a tiny distance from the previous local maximum. Thus, the correction seems to be there, but it seems to have already ended. Both trend lines continue to indicate the continued upward trend, but the pair traded for several days with a volatility of 40 points. In general, the situation is not the most favorable for trading. It is noteworthy that the price approached the Kijun-sen line three times and did not reach 1 point three times. We will analyze the results of the FRS meeting and the speech of Jerome Powell in the following articles, all the same it makes no sense to try to work out these events. In general, we still recommend trading from important levels and lines that are indicated on the hourly timeframe. The nearest important levels are 1.2076, 1.2113 and 1.2145, as well as the Kijun-sen line (1.2055). 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 United States is scheduled to publish GDP for the first quarter of 2021, which, according to various estimates, may range from 6.1% to 6.6% q / q. Thus, the US dollar may receive market support today.
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 13-19), the EUR / USD pair increased by 120 points. We would like to remind that since February major players have been intensively cutting buy contracts and opened sell contracts. In the “Non-commercial” group, since the beginning of February, the total number of Buy-positions has decreased from 240 thousand to 190, and the number of Sell-positions has grown from 76 thousand to 127. Thus, the weakening of the “bullish” mood is evident, however, it is still remains bullish, but in the last two weeks it has begun to strengthen again. Recall that the COT reports signal the end of the uptrend since last September, when the lines of the first indicator moved as far apart as possible. However, we still remind traders that the factor of pumping money into the American economy has not been canceled. Simply put, large players can trade as they please, in any direction, buy any currency, but if at the same time the money supply of dollars increases by trillions, but the influence of the players themselves on the foreign exchange market becomes less. Accordingly, now in the first place is simply the factor of the increase in the money supply in the United States, and not the behavior of non-commercial and commercial traders in the foreign exchange market. During the last reporting week, professional traders opened 6.2 thousand buy contracts and closed 8.5 sell contracts. Thus, their net position increased by 14.7 thousand contracts. Thus, it is possible that the major players realized that the European currency would still rise in price, and the dollar would fall, and decided to trade with the trend themselves. If earlier it was the big players who formed the trend, now they themselves follow the trend. In general, from our point of view, the likelihood of further growth of the European currency in 2021 is very high.
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.