Analysis of EUR/USD, 5-minute chart
The euro/dollar pair continued the upward movement that began a few days before. It is noteworthy that during the correction, the price broke through the ascending trend line, which indicates a change of trend to a downward one. As we can see, this did not stop the bulls, who simply took a break for a few days. Yesterday there was a lot of macroeconomic background, but we can't say which report fueled the euro to rise significantly. The thing is that the EU business activity report can hardly be considered strong or optimistic. Therefore, the euro shouldn't have grown due to this report. The US data was disappointing, but only partly, as some reports were stronger than expected. Therefore, in my opinion, the dollar's decline by a total of 100 points was quite illogical. Especially considering the fact that the price went through the trend line. However, for some reason the market does not want to buy the dollar now just as it did not want to buy the euro. The only thing we can assume in such circumstances is that the pound pulled the euro up.
Speaking of the situation with technical signals, it was quite simple. Despite the upward movement during the day, the pair was traded in a range with lots of levels and lines. When the price broke through one of them, it immediately hit the next one, so it was necessary to consider them all as a range. The price managed to move out of that range only late at night, when it was definitely not advisable to open any positions. Therefore traders should not have opened any positions on Wednesday.
The Commitment of Traders (COT) reports on the euro in 2022 are a paradox. Halfway through the year they showed an outright bullish mood of commercial players, but at the same time the euro was falling steadily. Then for a few months they showed a bearish mood, and the euro also steadily fell. Now the net position of the non-commercial traders is bullish again and getting stronger, and the euro has hardly moved away from its 20-year lows. This is happening, as we said, because demand for the U.S. dollar remains very high amid the difficult geopolitical situation in the world. So even if the demand for the euro is rising, the high demand for the dollar still does not allow the euro itself to rise as much. In the given period, the number of long positions from the non-commercial group increased by 7,000, whereas the number of shorts - by 2,000. As a result, the net position increased by about 5,000 contracts. The euro has been slowly rising in recent weeks, which already coincides with the readings of the COT report. At the same time we think that the dollar will rise due to the same geopolitics or due to the lack of factors for the euro's growth. The green and red lines of the first indicator are far away from each other, which may indicate the end of the uptrend (which, in fact, never happened). The number of longs exceeds the number of shorts by 113,000. Thus, the net position of the non-commercial traders may go on rising but it may not provoke the same growth for the euro. If we look at the overall indicators of open longs and shorts across all categories of traders, then there are 39,000 more shorts (635,000 vs 596,000).
Analysis of EUR/USD, 1-hour chart
The EUR/USD pair aimed to resume the upward trend on the one-hour chart. Just a little more and the last local high could have been updated. The market still finds reasons to buy despite the fact that the price broke through the trend line, and the fundamental background is not exactly supportive of the euro. On Thursday, the pair may trade at the following levels: 1.0072, 1.0119, 1.0195, 1.0269, 1.0340-1.0366, 1.0485, 1.0579, and also Senkou Span B (1.0207) and Kijun Sen (1.0315). Lines of the Ichimoku indicator may move during the day, which should be taken into account when determining trading signals. There are also support and resistance levels, but signals are not formed near these levels. Bounces and breakouts of the extreme levels and lines could act as signals. Don't forget about stop-loss orders, if the price covers 15 pips in the right direction. This will prevent you from losses in case of a false signal. On November 24, European Central bank representatives will give a speech in the European Union. In particular, Isabelle Schnabel and Luis de Guindos may make interesting statements. However, it should be noted that the euro has been growing very well in recent weeks without the support of the ECB representatives.
What we see on the trading charts:
Price levels of support and resistance are thick red lines, near which the movement may end. They do not provide trading signals.
The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, moved to the one-hour chart from the 4-hour one. They are strong lines.
Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals.
Yellow lines are trend lines, trend channels, and any other technical patterns.
Indicator 1 on the COT charts reflects the net position size of each category of traders.
Indicator 2 on the COT charts reflects the net position size for the non-commercial group.