empty
07.05.2024 12:36 PM
EUR/USD. May 7th. The bulls are running out of strength

The EUR/USD pair on Monday retraced to the resistance zone of 1.0785–1.0797, which is part of the larger resistance zone of 1.0764–1.0806. A bounce of quotes from this zone will favor the American currency and lead to a new decline towards the corrective level of 100.0% (1.0696). The ascending trend channel continues to characterize traders' sentiment as "bullish." The consolidation of the pair's rate above the level of 1.0806 will increase the likelihood of further growth towards the next Fibonacci level of 50.0%–1.0840.

This image is no longer relevant

The wave situation remains unchanged. The last downward wave failed to reach the low of the previous wave, while the new upward wave had already broken the peak of the previous wave. Thus, a "bullish" trend has formed, but its prospects personally raise doubts for me. Over the past 2-3 weeks, the information background has supported bull traders, but will it continue to do so? This is a big question, as the economy of the European Union is not in the best shape, and the ECB is ready to start easing monetary policy much earlier than the Fed, already having a much lower interest rate.

The information background on Monday was weak, and on Tuesday, it was even weaker. Neither yesterday nor today have we seen any attractive movements. Yesterday, it became known that the business activity index in the EU services sector was slightly above expectations – 53.3. Today, the retail trade report will be released. However, neither of these reports is paramount for traders, so it is quite difficult to expect further growth in the euro today. I believe that after the formation of another upward wave, a downward wave should begin, which allows for the current trend channel and the nature of movement. The bulls will find it difficult to break through the zone of 1.0764–1.0806 on the first attempt. I expect the euro to decline this week.

This image is no longer relevant

On the 4-hour chart, the pair has executed a reversal in favor of the European currency and continues the upward process towards the upper line of the "wedge." A bounce of quotes from this line will favour the US dollar and some decline towards the corrective level of 23.6%–1.0644. Consolidation of quotes above the "wedge" will increase the likelihood of further growth towards the next Fibonacci level of 50.0%–1.0862. There are no imminent divergences today.

Commitments of Traders (COT) report:

This image is no longer relevant

During the last reporting week, speculators closed 111 long contracts and 3323 short contracts. The sentiment of the "non-commercial" group has shifted to "bearish" and is overall rapidly strengthening. The total number of long contracts held by speculators now stands at 167,000, while short contracts amount to 173,000. The situation will continue to favor bears. In the second column, we see that the number of short positions has increased from 92,000 to 173,000 over the past three months. During the same period, the number of long positions decreased from 211,000 to 167,000. Bulls have dominated the market for too long, and now they need a strong information background to resume the "bullish" trend. Several poor reports from the US have supported the euro, but in the long run, more is needed.

News Calendar for the US and the European Union:

EU – Change in Retail Trade Volume (09:00 UTC).

On May 7th, the economic events calendar contains only one entry. The impact of the information background on traders' sentiment for the rest of the day will be very weak.

Forecast for EUR/USD and trader advice:

Sales of the pair are possible today upon consolidation below the level of 1.0764 on the hourly chart with a target of 1.0696. I would only consider buying the euro once the pair consolidates above the level of 1.0806 on the hourly chart, with targets at 1.0840 and 1.0874.

Samir Klishi,
Analytical expert of InstaForex
© 2007-2024
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

EUR/USD Forecast for December 30, 2024

As the New Year approaches, the currency market remains relatively stable, although there are signs of a potential strong dollar rally across all financial markets. One key indicator

Laurie Bailey 04:09 2024-12-30 UTC+2

GBP/USD Forecast for December 30, 2024

On the daily chart, the price has slightly rebounded from the 1.2510 support level. This bounce represents the price's development within the consolidation range of 1.2510-1.2616. Friday's movement allowed

Laurie Bailey 04:09 2024-12-30 UTC+2

USD/JPY Forecast for December 30, 2024

The USD/JPY pair has settled within the 157.72-158.32 range. The Marlin oscillator is turning downward. These technical indicators, especially given the decline in stock indices, suggest a possible reversal toward

Laurie Bailey 04:09 2024-12-30 UTC+2

Gold - Technical Analysis of the Situation

The holiday season continues to impact the market, balancing opportunities and participant activity. Over the past week, the price range has been narrow. Current support is established at the weekly

Evangelos Poulakis 00:23 2024-12-30 UTC+2

XAU/USD: Gold Prices to Continue Trading in a Sideways Range

Gold prices, after reaching a local high at the end of October due to widespread geopolitical risks in the Middle East and Ukraine, have significantly corrected downward and are currently

Pati Gani 10:53 2024-12-27 UTC+2

EUR/USD: December 27th. The Euro Hopes for a New Year Miracle

On Thursday, the EUR/USD pair returned to the 1.0420 level, and today it has consolidated above it. Despite the very low trading activity, the pair is not completely stagnant. However

Samir Klishi 10:51 2024-12-27 UTC+2

GBP/USD: December 27th. The Pound Lacks Trader Interest

On the hourly chart, the GBP/USD pair continued its sluggish decline toward the 1.2488 level on Thursday. However, this level was not reached, and the movement can barely be called

Samir Klishi 10:17 2024-12-27 UTC+2

Video analysis for December 27, 2024

Potential for the further drop on BTC/USD

Petar Jacimovic 09:32 2024-12-27 UTC+2

Forex forecast 27/12/2024: EUR/USD, USD/JPY, Oil and Bitcoin

Video Agenda: 00:00 INTRO 00:13 Totay's key events: Crude Oil Inventories, Goods Trade Balance, Retail Inventories Ex Auto, U.S. Baker Hughes Oil Rig Count 01:40 EUR/USD 03:04 OIL 06:46 USD/JPY

Sebastian Seliga 09:21 2024-12-27 UTC+2

Trading Signals for GBP/USD for December 27-30, 2024: buy above 1.2540 (21 SMA - symmetrical triangle)

The level we should pay attention to is the 1.2540 zone. The signal will be positive above this zone and we will buy the GBP/USD pair with the target

Dimitrios Zappas 05:22 2024-12-27 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.