EUR/USD 1H
EUR/USD unexpectedly showed an upward movement on the hourly timeframe during the second trading day of the week. Recall that a few days ago, buyers once again failed to overcome the upper limit of the side channel 1.0750-1.1000, from which the price successfully rebounded and began to move down. However, the bears did not "turn" below the Senkou Span B line and the support area of 1.0880-1.0893, thus providing a new chance for the bulls, which they successfully used. As a result, yesterday the euro/dollar pair returned to the April 19 high at 1.0990, worked it out and, as of the current moment, rebounded from it. Thus, sellers run the risk of losing the initiative again, which sellers will have to use to start a new downward movement, at least in the area of the Senkou Span B. line. We believe that this option is still the main and most likely one. However, there is a backup option, providing for the pair's growth. However, for this, the bulls still need to overcome the area of 1.0990-1.1006.
EUR/USD 15M
We see how buyers completely dominate the market on the 15-minute timeframe in the last trading day. Both channels of linear regression are directed upward, clearly indicating an upward trend. At the time of writing, there are not even signs of any channel turning down. However, everything, as before, depends on the area of the psychological level of 1,1000, from which the pair is likely to rebound again.
COT Report
The latest COT report of May 19 showed that large traders who trade for the purpose of earning exchange rate profit, and not for hedging and conducting current activities, continued to reduce euro purchases in the reporting week and increased sales. The growth of the latter was small, only 1257 contracts, but in aggregate with -3425 contracts for sale, we have a serious deterioration in the mood of traders regarding the euro. The total number of purchase contracts also decreased by 294 units, and the number of Short-deals increased by 970 units. Thus, we see that the mood of traders remains bearish and only intensifies. However, the beginning of the new week shows that the US dollar was not able to extract dividends from this, and trading continues to be held according to the "technical scenario".
The fundamental background for the pair at this time remains neutral. Neither the euro nor the dollar are now taking advantage of the foreign exchange market. Of course, this does not mean that the pair will now trade in the 1.0750-1.1000 range until the crisis ends or something extraordinary happens. However, the current foundation does not make it possible to guess where the steam can go further. The adoption of the next package of stimulating the eurozone economy is the key issue in the European Union. But since the EU is not the United States, where everything depends on Congress, that is, on whether the Democrats and Republicans agree among themselves, there are problems with adopting this package. The euro is not yet experiencing market pressure in connection with this. Nevertheless, in the long run, this may lead to higher growth rates in the fall of the European economy. The topics of interest in the United States at this time are much larger and all of them are also long-term. Today we recommend that you pay attention to the speech of the European Central Bank President Christine Lagarde.
Based on the foregoing, we have two trading ideas for May 27:
1) It is possible for the pair to grow further if the range of levels 1.0990 and 1.1006 is overcome. In total, these two levels form a strong area of resistance, which buyers are not yet able to overcome. However, it is not necessary to completely put an end to the possibilities of the bulls. Overcoming this area and buying will become relevant with the goal of 1.1111 - the second level of resistance. Potential to take profit in this case will be about 130 points.
2) The second option - bearish - as usual, is more likely. You are advised to sell the EUR/USD pair again, since a rebound from the 1.0990 level has already been completed. So the pair has already begun to fall to the Kijun-sen line (1.0939) and the Senkou Span B line (1.0887). Potential to take profit is 35 and 80 points. Given the average volatility of the pair, these profit indicators are quite good.
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