Analysis of EUR/USD on 5-Minute Timeframe

The EUR/USD currency pair traded higher for most of Friday but retreated from local highs as the evening approached. Overall, the movements were entirely logical from a technical point of view, as shown on the 5-minute timeframe. There were virtually no fundamental or macroeconomic events that could have influenced market sentiment during the day. However, for the past month and a half, such events have not been necessary for the market. The dollar has risen at every opportunity, ignoring weak data, the absence of important data, and any fundamental events. Therefore, we have been saying for several weeks that trading should rely solely on technical factors.

On Friday, the only report of the day was the University of Michigan consumer sentiment index. It was significantly worse in November than in the previous month and the forecasts. Thus, this report could have provoked a rise in the pair, but just half an hour after its publication, the pair began to fall. As we can see, the macroeconomic background continues to have no impact on trading. The price simply reached the Senkou Span B line, bounced back, and started to decline.

On the 5-minute timeframe, a very good trading signal was formed on Friday. During the European trading session, the price bounced off the 1.1534 level and subsequently approached the Senkou Span B line. As the day was nearing its end and the market was closing for the weekend, the buy position could have been closed in profit of about 40-45 pips.

COT Report

The latest COT report is dated September 23. Since then, no further COT reports have been published due to the U.S. "shutdown." In the illustration above, it is clear that the net position of non-commercial traders has long been "bullish," with bears struggling to gain the upper hand at the end of 2024 but quickly losing it. Since Trump took office for a second term as President of the U.S., the dollar has been falling. We cannot assert that the decline of the American currency will continue with 100% probability, but current world events suggest that this may be the case.

We still do not see any fundamental factors that would strengthen the euro, while there remain sufficient factors that would weaken the dollar. The global downtrend is still ongoing, but what difference does it make where the price moved in the last 17 years? Once Trump concludes his trade wars, the dollar may start to rise, but recent events indicate that the war will continue in one form or another for a long time yet.

The position of the red and blue lines of the indicator continues to indicate the preservation of a "bullish" trend. During the last reporting week, the number of long positions in the "Non-commercial" group decreased by 800, while the number of shorts increased by 2,600. Consequently, the net position decreased by 3,400 contracts over the week. However, this data is already outdated and holds no significance.

Analysis of EUR/USD on the Hourly Timeframe

On the hourly timeframe, the EUR/USD pair continues to form a downward trend. Currently, there is no trend line, so we can only rely on the Ichimoku indicator lines. If Senkou Span B is breached, the trend will shift to an upward one. We believe the main reason for the illogical and inadequate movements lately is the persistent flat trend on the daily timeframe. As the price approached the lower boundary of the sideways channel, a local upward trend can be anticipated on the hourly timeframe.

For November 10, we identify the following trading levels: 1.1234, 1.1274, 1.1362, 1.1426, 1.1534, 1.1604-1.1615, 1.1657-1.1666, 1.1750-1.1760, 1.1846-1.1857, 1.1922, 1.1971-1.1988, as well as the lines of Senkou Span B (1.1587) and Kijun-sen (1.1531). The lines of the Ichimoku indicator may shift throughout the day, which should be taken into account when determining trading signals. Don't forget to set the Stop Loss order to breakeven if the price moves in the correct direction by 15 pips. This safeguards against potential losses if the signal turns out to be false.

On Monday, there are no important or even interesting events or reports scheduled in either the Eurozone or the U.S. Therefore, we may face yet another "boring Monday."

Trading Recommendations:

On Monday, traders can expect the upward movement to continue if the Senkou Span B line is breached. In this case, the euro will continue its logical growth with targets at 1.1604-1.1615 and 1.1657-1.1666. Short positions can be considered today if the price bounces off the Senkou Span B line for the second time.

Explanations for Illustrations:

• Support and resistance price levels are shown as thick red lines, near which the movement may end. They are not sources of trading signals.
• Kijun-sen and Senkou Span B lines are lines from the Ichimoku indicator transferred to the hourly timeframe from the 4-hour timeframe. They are strong lines.
• Extreme levels are thin red lines from which the price previously bounced. They are sources of trading signals.
• Yellow lines are trend lines, trend channels, and any other technical patterns.
• Indicator 1 on COT charts represents the size of each category of traders' net position.