The euro/dollar immediately fell by 150 points on Monday. This was followed by recovery, corrections, which, however, were purely corrective in nature, that is, the current downward trend is not broken. The most important fact is this: despite the strongest fall in the euro in recent weeks, there is still no feeling that the downward trend is over, or even close to being over. The price even bounced up by one and a half hundred points on Monday, but then it resumed its downward movement anyway. Moreover, on Monday, except for the speech of European Central Bank President Christine Lagarde, there was absolutely nothing to highlight. In our fundamental articles, we have already analyzed why the elections in Italy are not related to the euro's collapse. Yes, and Lagarde herself spoke much later than the euro's overnight collapse and the subsequent rapid recovery. Thus, we believe that the market is simply fleeing in a panic from risky assets, and not from all of them, since bitcoin practically does not move.
Not a single trading signal was formed on Monday, because the pair has not been at current price levels for more than 20 years. One new level has appeared - 0.9553 - and today signals can be formed around it, but we urge you to be careful with opening any positions, as the market is now clearly in a state of panic.
The Commitment of Traders (COT) reports on the euro in the last few months clearly reflect what is happening in the euro/dollar pair. For half of 2022, they showed a blatant bullish mood of commercial traders, but at the same time, the euro fell steadily. At this time, the situation is different, but it is NOT in favor of the euro. If earlier the mood was bullish, and the euro was falling, now the mood is bearish and... the euro is also falling. Therefore, for the time being, we do not see any grounds for the euro's growth, because the vast majority of factors remain against it. During the reporting week, the number of long positions for the non-commercial group increased by 2,500, while the number of shorts decreased by 22,000. Accordingly, the net position grew by about 24,500 contracts. This is quite a lot and we can talk about a significant weakening of the bearish mood. However, so far this fact does not provide any dividends to the euro, which still remains "at the bottom". The only thing is that in recent weeks it has done without another collapse, unlike the pound. At this time, commercial traders still do not believe in the euro. The number of longs is lower than the number of shorts for non-commercial traders by 12,000. This difference is no longer too large, so one could expect the start of a new upward trend, but what if the demand for the US dollar remains so high that even the growth in demand for the euro does not save the situation for the euro/dollar currency pair?
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. September 27. The euro continues to fall by inertia. The results of the elections in Italy have nothing to do with it.
Overview of the GBP/USD pair. September 27. The pound finally has a real chance of completing a long downtrend.
Forecast and trading signals for GBP/USD on September 27. Detailed analysis of the movement of the pair and trading transactions.
The bears' prospects remain just fine on the hourly timeframe, given that now no one is even thinking about buying the euro. To say that a new collapse of the euro was provoked by some one specific event simply does not make sense. From our point of view, the market is in a panic, and it is hardly possible to say how long it will persist and how it will end. We highlight the following levels for trading on Tuesday - 0.9553, 0.9813, 0.9877, 0.9945, 1.0019, as well as Senkou Span B (1.0002) and Kijun-sen (0.9786). Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. There are also secondary support and resistance levels, but no signals are formed near them. Signals can be "rebounds" and "breakthrough" extreme levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price has gone in the right direction for 15 points. This will protect you against possible losses if the signal turns out to be false. Another speech by Lagarde will take place in the European Union on September 27, which is unlikely to affect anything, and a report on orders for durable goods will be published in the US, which is also unlikely to affect anything. The market may remain in a state of shock for several more days.
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.