September 21, 2021

Forecast and trading signals for EUR/USD on September 21. Detailed analysis of the pair's movement and trade deals. Euro calmed down and folded before the level of 1.1704

 The volatility for the EUR/USD pair decreased again and reached only about 30 points on Monday. Despite the fact that the dollar continued to rise in price in the first half of the day, the markets returned to their favorite trading mode in recent months - with low volatility. In general, the pair stood in one place on Monday all day. Unlike, for example, the pound, which continued to fall. Not a single important macroeconomic report was published during Monday. Therefore, traders had absolutely nothing to react to. It also cannot be said that the markets were trading the pair under the influence of their expectations regarding the QE program, which may begin to wind down in the near future. The markets just calmed down. Now let's move on to trading signals. There were only two of them, and given the low volatility, it was not possible to earn much on them. However, both signals were good in strength and still brought some profit to traders. The price bounced twice from the extremum level of 1.1704, forming buy signals. Therefore, traders should have taken long positions. However, the price could not rise to the nearest target level of 1.1750, so the long position should have been manually closed in the late afternoon. The profit on the deal was about 10 points. Not much, but what can you expect if the pair only passed 30 points?

You can also clearly see that the quotes were falling to the level of 1.1704 on the hourly timeframe. Recall that this level is also the previous local low and the target for the global downward correction (visible on the 24-hour timeframe). Therefore, the likelihood of an upward reversal near this level is very high. The Federal Reserve meeting will be held this Wednesday and, as we said in our fundamental articles, no matter what decision is made, the pair has excellent chances for growth, since the dollar has already risen in price "in advance" for a possible announcement of the withdrawal of the quantitative stimulus program. On Tuesday, we continue to draw the attention of traders to important levels and lines - 1.1666, 1.1704, 1.1750, 1.1805, as well as the Senkou Span B (1.1839) and Kijun-sen (1.1772) lines. The Ichimoku indicator lines can change their position during the day, which should be taken into account when looking for trading signals. Signals can be rebounds or breakthroughs of these levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price moves 15 points in the right direction. This will protect you against possible losses if the signal turns out to be false. No important event or report in the United States and the European Union on September 21. Thus, traders will have nothing to react to during the day. The lack of statistics can be fundamental for the euro/dollar pair. On Monday, for example, it was practically immobilized, and at the end of last week it was quite active. You need to be prepared for any scenario.

The EUR/USD pair fell by 60 points during the last reporting week (September 7-13). The latest Commitment of Traders (COT) report showed minimal changes in the mood of the "non-commercial" group of traders, which, we recall, is the most important group of traders. During the reporting week, professional traders closed 4,000 contracts for buying (longs) and also the same number for selling (shorts). Thus, the net position has not changed, as well as the mood of the major players. But serious changes followed in the "commercial" group, where traders immediately closed 27,000 buy contracts (longs) and 36,000 sell contracts (shorts). These data are less important, but still the difference is striking. Returning to commercial traders, the total number of buy contracts (longs) they now have is 187.5 thousand, and sell contracts at 160 thousand. Thus, the bullish mood still persists, but it has significantly weakened in recent months. Therefore, we can say that the euro/dollar pair is currently teetering on the edge of an abyss called a "new downward trend". In principle, we have already said that the critical point for maintaining the long-term upward trend, which began in March 2020, is the level of 1.1700. If the bears manage to overcome it after a 9-month ordeal, then the chances of further strengthening of the US currency will increase sharply. Therefore, this issue may be resolved in the coming days. On the other hand, much will depend on the actions of the Fed not only at the next meeting, but also in the near future. If the markets do not find evidence of readiness to curtail QE, then the US dollar will lose its trump card in the confrontation with the euro currency.