Daily Report EUR/USD by instaforex
Forex Analysis & Reviews: Trading plan for the EUR/USD pair for the week of December 21-25. New COT (Commitments of Traders) report. Markets continue to ignore the fundamental background and buy the euro.
*Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. *
During the past week, the EUR/USD pair again continued to break all records of its own high cost. The euro currency continues to grow and be in demand in the foreign exchange market. In the first place in terms of importance among all factors, technical ones remain, because the fundamental background and COT reports have long been in favor of the fall of the European currency. Now there are simply no fundamental reasons for the growth of the euro.
Thus, the euro/dollar pair continued its upward movement and overcame the resistance level of 1.2245 during this week. This means that the upward trend continues to persist on the lower timeframes, thus, you should continue to trade for an increase. It is very difficult to say when will the march to the north end. We continue to believe that the nature of the current strengthening lies solely in the "speculative factor". A lot of people are now comparing the rise of the euro with the rise of oil in 2008 to a record $ 145 per barrel.
COT report.
During the last reporting week (December 8-14), the EUR/USD pair increased by 30 points. Recall that over the past few weeks, COT reports have shown an increase in the net position of non-profit traders. Simply put, the mood of professional players became more "bullish", although for several months they had been preparing for massive sales of the euro currency. In the last reporting week, the Non-commercial group closed 5,200 buy contracts and opened 10,800 sell contracts. That is, the net position decreased by 16 thousand, which is quite a lot. That is, professional players are again looking in the direction of selling the euro currency. And if we take into account the long-term perspective, then non-commercial traders continue to lean towards selling the euro currency. This point is again clear and understandable.
The euro has been growing for a full nine months. All this time, it is extremely difficult for the dollar to even adjust. Therefore, the euro is now overbought. As for the indicators, they show the same decrease in the net position of non-commercial traders. The green line of the first indicator began to move again to meet the red line (net position of commercial traders), which is a signal of the end of the trend. Thus, we still expect the end of the euro's upward march, but at the same time, we remind you that until there are technical signals about the end of the upward trend, it is not recommended to trade down. There is no need to try to guess the downward reversal. T
he fundamental background for the pair continues to be present. That is, at this time (11 days before the New Year), there is (remained) a sufficient number of important and interesting topics. However, the absolute majority of them just remain an interesting topic. For example, the Fed held a meeting this week. The last one this year. And although it was again "passing", the American regulator did not give any new reasons to expect monetary policy easing. That is, there were no reasons after the Fed meeting to sell off the dollar again. However, market participants continued to do just that. Also this week, a new package of stimulus measures for the US economy was discussed again. It was discussed and not accepted. The epic is only slightly less interesting than the epic of Brexit and the London-Brussels trade negotiations. Since no package has yet been approved in the US Congress, traders again had no reason to sell the dollar and buy the euro. Well, as we have said many times, the fourth quarter for the European economy is likely to be a quarter of contraction, while the American economy is likely to grow by several percent. Thus, in economic terms, it is the US economy that is now in a better position. But as you can see, this also does not play any role for market participants. Therefore, there is only one thing to recommend here: continue to follow the trend as long as it persists. There's nothing else to do.
Trading plan for the week of December 21-December 25:
1) The pair's quotes continue their upward movement and now, in the coming weeks, they will aim for the level of 1.2487. Although the COT report and the fundamental background continue to signal a possible and very likely fall in the pair's quotes and the baselessness of the current growth, it can continue. "Technique" now eloquently signals an upward trend, so it is recommended to trade for an increase.
2) To be able to sell the EUR/USD pair, you need to at least wait for the price to consolidate below the Kijun-sen lines. However, we do not expect such a development in the near future, as the price is quite far from this line. Thus, short positions can only be considered on lower timeframes if a downward trend is formed.
Explanation of the illustrations:
Price levels of support and resistance (resistance/support) – target levels when opening purchases or sales. You can place Take Profit levels near them.
Ichimoku indicators, Bollinger Bands, MACD.
Support and resistance areas – areas from which the price has repeatedly bounced.
Indicator 1 on the COT charts – the net position size of each category of traders.
Indicator 2 on the COT charts – the net position size for the "non-commercial" group.
Performed by Paolo Greco, Analytical expert InstaForex Group © 2007-2020
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Chart H1 - by Bankstrade Blogg
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