Analysis of EUR/USD 5M

The EUR/USD currency pair traded lower again on Friday, despite the absence of any objective (even local) reasons for the decline. Indices of business activity in the services and manufacturing sectors were published for November in the Eurozone, Germany, and the U.S., and these reports were expected to assist traders on Friday. However, in reality, they, like the reports on the U.S. labor market and unemployment from the previous day, only added to the confusion. In Germany, the business activity index in the services and manufacturing sectors fell, contrary to expectations, while in the Eurozone, one index showed positive dynamics, while another showed negative dynamics. In the U.S., one index increased while the other declined. The University of Michigan consumer sentiment index fell to 51 points, even lower than forecasts. Overall, this statistical package cannot be interpreted in favor of the U.S. dollar. Nevertheless, the American currency rose slightly again, although very weakly, as volatility remains low.

From a technical standpoint, a new trend line has formed on the hourly timeframe. A price consolidation above this line and a break above the Ichimoku indicator lines will signal to traders about another potential trend change to the upside, which we have seen four times in the last two months. Nonetheless, the global downward correction and the sideways movement on the daily timeframe must eventually come to an end.

On the 5-minute timeframe Friday, two trading signals were generated: one buy signal (false) and one sell signal (correct). In both cases, the price moved in the right direction by a very small distance, but it was still possible to earn 15-20 pips on the short position, which covered the loss from the long position.

COT Report

The last COT report was published last week and is dated October 7, making it, to put it mildly, outdated. The illustration above clearly shows that the net position of non-commercial traders has long been "bullish." Bears barely entered the zone of their own superiority at the end of 2024 but quickly lost it again. Since Trump took office for a second time, the dollar has been falling. We cannot say with 100% certainty that the decline of the U.S. currency will continue, but current global developments hint at just such a scenario.

We still do not see any fundamental factors supporting the strengthening of the euro, but we do see enough factors supporting the decline of the dollar. The global downward trend still persists, but what significance does it have for the price movement over the last 17 years? The dollar could rise if the global fundamental picture changes, but currently, there are no signs of that.

The positions of the red and blue lines in the indicator continue to show a bullish trend. Over the last reporting week, the number of longs in the "Non-commercial" group increased by 3,300, while the number of shorts increased by 2,400. Consequently, the net position increased by 900 contracts over the week. However, this data is already outdated and irrelevant.

Analysis of EUR/USD 1H

On the hourly timeframe, the EUR/USD pair continues to form a new downward trend. The price remains within the sideways channel of 1.1400-1.1830 on the daily timeframe, so growth toward the 1.1800 level can still be expected soon, even within the framework of a local trend. However, for such a movement, a price consolidation above the Senkou Span B line and above the trend line is required.

On November 24, we highlight the following trading levels: 1.1234, 1.1274, 1.1362, 1.1426, 1.1542, 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 Senkou Span B line (1.1563) and the Kijun-sen line (1.1550). The Ichimoku indicator lines may move during the day, which should be taken into account when determining trading signals. Remember to set a stop-loss order at breakeven if the price moves in the correct direction by 15 pips. This will protect against potential losses if the signal turns out to be false.

On Monday, another speech by European Central Bank President Christine Lagarde is scheduled in the Eurozone, which is currently of little interest to anyone. In Germany, the business climate index will be published, which is not even a secondary indicator but a tertiary one. All signs point to renewed low volatility today.

Trading Recommendations:

On Monday, traders can trade from the level of 1.1542 in conjunction with the critical line. In the event of a rebound, consider selling; in the event of consolidation above the Senkou Span B line, consider buying. However, last week once again proved our constant observation—the market does not want to trade; volatility is low, and logical movements are still not being observed.

Explanations for the Illustrations:

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