Relevance up to 20:00 2021-11-03 UTC–4
The EUR/USD pair showed volatility equal to 40 points on Tuesday. That is how much the pair passed during the entire Asian trading session, European and US. Needless to say, such a movement is called not just “flat”, but a “total flat”? No important macroeconomic reports released in either the United States or the European Union on Tuesday. Thus, traders, in fact, had nothing to react to during the day. A single report on business activity in the manufacturing sector of the eurozone (figure “1” in the chart) did not provoke any reaction, as its value did not differ from the forecast. It should also be noted that on the eve of the day when the results of the Federal Reserve meeting will be announced, the markets did not find any reason to trade actively. This means that they prefer not to force things or take unnecessary risks. Although in the case of the euro/dollar pair, the markets have not been taking unnecessary risks for several consecutive months. All that remains for us is to analyze all the trading signals that were generated during the past day. Fortunately, there were few of them. The first signal – to sell – was formed at the beginning of the European session, when the price bounced off the critical line of the Kijun-sen. Subsequently, the price managed to fall about 20 points and even reach the nearest target extremum level of 1.1584. It was the rebound from this level that allowed to close the deal in profit of about 12 points. However, with such “crazy” volatility, it was possible, in principle, not to enter the market. A short position could also be closed in zero profit if traders set Stop Loss to breakeven after 15 points down, according to our recommendations. In any case, either no profit or minimal profit. A buy signal from the level of 1.1584 could also be worked out with a buy trade, but it did not bring profit, since the price went below this level a little later, “eating” the profit on the first trade.
The hourly timeframe also clearly shows that the euro/dollar pair was in absolute flat on Tuesday and practically did not move. However, in addition to this, the chart above clearly shows the absence of a trend. Not just the absence of a trend line or channel, but the absence of even a horizontal channel. That is, now neither flat nor trend have formed for the pair. This is an absolutely confusing situation and, given the macroeconomic and fundamental background this week, it is unlikely that it will become clearer. We highlight the following levels for trading on Wednesday – 1.1507, 1.1529, 1.1584, 1.1666, 1.1704, as well as the Senkou Span B (1.1620) and Kijun-sen (1.1613) lines. The Ichimoku indicator lines can change their position during the day, which should be taken into account when looking for trading signals. Signals can be rebounds or breakthroughs of these levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price moves 15 points in the right direction. This will protect you against possible losses if the signal turns out to be false. The European Union will publish the unemployment rate, and European Central Bank President Christine Lagarde will give a speech. The results of the Fed meeting will be announced in America, and during the day – the ADP report on the state of the labor market, as well as the index of business activity for the ISM services sector. Both of these reports, under certain circumstances, can cause a reaction from the market, as they are “relatively important”.
We recommend you to familiarize yourself:
Overview of the EUR/USD pair. November 3. Will the Fed surprise the markets? What to expect from the Fed meeting?
Overview of the GBP/USD pair. November 3. France changed its mind to develop a “fish conflict” with Great Britain.
Forecast and trading signals for GBP/USD for November 3. Detailed analysis of the movement of the pair and trade deals.
Analysis of the COT report
The mood of non-commercial traders practically did not change during the last reporting week (October 19-25). A group of non-commercial traders opened 4,000 sell contracts (shorts) and 4,000 buy contracts (longs). Consequently, the net position of professional players has not changed. And if so, then the mood of the large traders remained… bearish. Yes, exactly bearish, as evidenced by both indicators in the chart above. The green and red lines of the first (net positions of non-commercial and commercial players) continue to move towards each other, which still means that the upward trend is ending. Or the downward correction is delayed. Recall that the process of convergence of these lines began at the beginning of the year, when the upward movement stopped. At this time, this whole process does not even fit into a chart – the downward movement continues for so long, which we still consider to be a correction. The most interesting thing is that the last two trading days this week did not make it into the latest COT report. That is, we do not know how the major players traded on Thursday and Friday, when the pair passed about 250 points. It should also be noted that the net position of non-commercial traders remains below zero. That is, the number of short positions exceeds the total number of long positions. Consequently, based on the COT reports, the fall of the European currency may continue. The nearest target, as we have already said, is the important level of 1.1490. So far, the COT reports absolutely do not provide a conclusion about a change in trend.
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.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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