Relevance up to 00:00 2022-01-20 UTC+00
The EUR/USD pair resumed its downward movement on Tuesday. Nothing interesting happened on the currency market on Monday, either in terms of movement or “foundation”. On Tuesday, there was nothing interesting only in terms of the “foundation”, as the calendar of macroeconomic events remained empty. But the bears woke up and went back to selling the pair. We have already said in other articles that we expect a resumption of the downward trend in the euro/dollar. The euro really has very little reason to grow now. Thus, we believe that the situation is developing logically. As already mentioned, there were no interesting events for the euro or the dollar on Tuesday. Therefore, it remains only to deal with the technical picture. And I must say there are difficulties with it. Let’s start with the fact that this time the movement began at night, in the Asian trading session. The price bounced almost perfectly from the critical line, as well as from the extreme level of 1.1420. This signal could and should have been worked out, but since it was formed at night, traders could have missed it. At the same time, those who worked it out got an excellent profit at the end of the day. Bears exerted pressure throughout the day. The euro continued to fall during the European trading session, and it intensified in the US. As a result, by the end of the day, the pair was near the extreme level of 1.1360, which it also almost immediately overcame. Therefore, even at this time, traders could remain in short positions. Later in the evening, it was still necessary to think about profit-taking, and the overall downward movement was about 75 points. The movement itself was very good, as there were practically no rollbacks and corrections during the day. Volatility was also very good, both for the European currency and with an empty calendar.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. January 19. Euro found no grounds for continued growth.
Overview of the GBP/USD pair. January 19. No one is interested in the Bank of England, everyone is interested in the resignation of Boris Johnson.
Forecast and trading signals for GBP/USD on January 19. Detailed analysis of the movement of the pair and trading transactions.
Recent Commitment of Traders (COT) reports have shown that the mood of professional traders is practically unchanged. The green and red lines of the indicators, which indicate the net positions of the most important groups of traders “non-commercial” and “commercial”, practically do not move and are near the zero mark. This means that the mood is now as neutral as possible, and the general trend of mood changes still remains downward. Nevertheless, we recall that in most cases the trend movement ends when the red and green lines move away from each other by a considerable distance, which is not the case now. Thus, COT reports now signal that the euro may continue to fall. This coincides with our expectations, as the US fundamentals remain very strong. At the same time, the upward movement in the last week may simply be an “acceleration” in order to cross the important level of 1.1230, which the bears have not been able to overcome for a month and a half.
The technical picture on the hourly timeframe remains difficult, however, we warned that the pair may continue to fall. The Kijun-sen line was overcome relatively easily, which signaled the continuation of the downward movement. At the moment, the pair is located near the Senkou Span B line, which is also a powerful support for it. If the bears manage to overcome it, then the chances of a rapid recovery of the euro currency will practically disappear. Given that there will be an extremely small number of interesting events and reports this week, traders can continue to calmly sell the pair without looking at other factors. We allocate the following levels for trading on Wednesday – 1.1274, 1.1360, 1.1434, as well as the Senkou Span B (1.1329) and Kijun-sen (1.1420) lines. The lines of the Ichimoku indicator may change their position during the day, which should be taken into account when searching for trading signals. Signals can be “bounces” and “breakthroughs” of these levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price went in the right direction of 15 points. This will protect against possible losses if the signal turns out to be false. The European Union and the United States will again not have a single important macroeconomic report on January 19, as well as any other fundamental event. Thus, the markets can continue to bend their line. And their line is now quite simple – the sale of the euro currency.
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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