To open long positions on EUR/USD, you need:
Yesterday morning, I paid attention to long positions after surpassing the upper border of the horizontal channel. Let's take a look at the 5-minute chart and talk about what happened. Considering that the GDP of the eurozone was slightly better than economists' forecasts, and the index of sentiment in the business environment in Germany and the eurozone significantly increased - this resulted in the euro's growth and the breakdown of resistance at 1.2149. For the sake of fairness, take note that I did not get a normal consolidation and test of the 1.2149 level from top to bottom, since this area was smeared, so I did not manage to enter long positions from this level as I had planned in my morning forecast. I marked the scenario in which I would enter long positions on the chart using blue lines. After EUR/USD returned to the area below the 1.2149 level in the afternoon, it was also not possible to enter the bear market in time for a similar reason. And the deprivation of consolidation below 1.2110 resulted in creating a convenient sell signal, but I did not wait for a major fall in the pair.
Today, the buyers of the euro will fight for the support of 1.2085, as the pair's succeeding direction depends on it. Forming a false breakout in that area generates a signal to open long positions. Since fundamental reports from the EU will not be published today, the bulls are unlikely to be able to lean on something to protect the 1.2085 level. In case of a false breakout, their goal is to return to the area of the middle of the 1.2125 channel, where the moving averages are, which are already playing on the side of the euro sellers. Once the pair has settled and the 1.2125 level has been tested from top to bottom, bulls will aim for the monthly high of 1.2166, where I recommend taking profits. In the event of a succeeding downward correction of the euro before the minutes of the Federal Reserve is published, then it is best not to rush into long positions, but to wait for the next support test at 1.2048, from where you can open long positions immediately on a rebound, counting on an upward correction of 20-25 points within the day. The next major level is seen around 1.2048.
To open short positions on EUR/USD, you need:
It is best to open short positions in the morning following the upward trend to the resistance area of 1.2125. Forming a false breakout in that area creates a good entry point to sell the euro in order to return to the lower border of the horizontal channel at 1.2085. An equally important task for sellers will be a breakout and consolidation below support at 1.2085, a test of which from the bottom up will create a good entry point to short positions, counting on a larger downward movement of the pair to the area of the low of 1.2048, where I recommend taking profits. The 1.2003 level will be a distant target. If the bears are not active in the 1.2125 area in the first half of the day, and the moving averages pass there, which are already on their side, then it would be best to hold back from short positions until the test of the upper border of the 1.2166 channel, from where you can sell EUR/USD immediately on a rebound, counting on a downward correction of 20-25 points within the day.
The Commitment of Traders (COT) report for February 9 revealed an increase in short and long positions, which reflects the current situation. The equality of buyers and sellers clearly characterizes the entirety of last week, which is where the pair was, in a horizontal channel. It is important to note that any adequate decline in the EUR/USD pair has always been accompanied by quick buys, and the fact that the US dollar continues to be less and less in demand among investors has already been mentioned many times. Therefore, I think a more correct approach to the market is to buy the euro. The only problem for the euro is the lack of guidance from the European Central Bank and the risk of verbal intervention, which limits the growth potential. However, the demand for the euro will only increase with each significant downward correction in the pair. The COT report indicated that long non-commercial positions rose from 216,887 to 220,943, while short non-commercial positions rose from 79,884 to 80,721. As a result, the total non-commercial net position rose after last week's decline to 140,222 from 137,003. The weekly closing price was 1.2052 against 1.2067 a week earlier.
Indicator signals:
Moving averages
Trading is carried out slightly above 30 and 50 moving averages, but the market remains sideways.
Note: The period and prices of moving averages are considered by the author on the H1 chart and differs from the general definition of the classic daily moving averages on the D1 daily chart.
Bollinger Bands
A breakout of the upper border of the indicator in the 1.2137 area will lead to a new wave of growth for the euro. In case the pair falls, support will be provided by the lower border of the indicator in the 1.2095 area.
Description of indicators
- Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
- Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
- MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
- Bollinger Bands (Bollinger Bands). Period 20
- Non-commercial speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
- Long non-commercial positions represent the total long open position of non-commercial traders.
- Short non-commercial positions represent the total short open position of non-commercial traders.
- Total non-commercial net position is the difference between short and long positions of non-commercial traders.
