EUR/USD – 1H.
On February 19, the EUR/USD pair continued the growth process that started two days earlier. Closing quotes above the Fibo level of 38.2% (1.2104) allowed traders to expect continued growth in the direction of the corrective level of 50.0% (1.2151), which the pair eventually did not reach. Thus, I got the opportunity to build a new downward trend line. If this line is not canceled in the near future, traders can expect a reversal in favor of the US currency and a resumption of the fall in the direction of the Fibo level of 23.6% (1.2046). Fixing the pair's rate above the trend line will work in favor of continuing the growth of the euro in the direction of the corrective level of 61.8% (1.2197). On Friday, traders closely followed the indicators of business activity in the European Union and the United States. The fact is that it is the business activity that is a harbinger of changes in the economy. Roughly speaking, if the business activity falls (as well as economic activity), then the economy will slow down or contract. Thus, in the European Union in recent months, it is the recovery services sector that is slowing down the economic recovery. Let me remind you that the latest EU GDP report showed a contraction in the fourth quarter. Thus, as long as the business activity does not return to the "positive zone", that is, above the level of 50, there is no need to expect an acceleration in the recovery. Unfortunately, business activity in this area of the EU did not get better in February. Thus, the European economy may not experience the best of times for a few more months.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a fall to the corrective level of 161.8% (1.2027), a rebound from it, and a reversal in favor of the European currency. Thus, the growth process can be continued in the direction of the level of 1.2204. Bullish divergence also increases the likelihood of further gains. Closing the pair's exchange rate at the level of 161.8% will work in favor of the US currency and resume falling in the direction of the corrective level of 127.2% (1.1729).
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair performed the second breakdown of the lower border of the upward trend corridor and also false. Therefore, at the moment, the pair still retains the chances of continuing the growth process in the direction of the corrective level of 423.6% (1.2496). Closing under the corridor will allow you to count on a long drop in quotes.
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair has made a consolidation above the "narrowing triangle", which preserves the prospects for further growth of the pair in the long term.
Overview of fundamentals:
On February 19, reports on business activity in the service and manufacturing sectors were released in the European Union and America. All indices showed positive dynamics, except for the index in the EU services sector.
News calendar for the United States and the European Union:
EU - ECB President Christine Lagarde will deliver a speech (14:30 GMT).
On February 22, the calendars of economic events in the European Union and the United States are empty. There will only be a speech by Christine Lagarde, the ECB President.
COT (Commitments of Traders) report:
Last Friday, the next COT report was released and for the second week in a row, it turns out to be very calm. If a week earlier the "Non-commercial" category of traders increased long contracts and got rid of short contracts, but in small quantities, then in the last week they increased both long and short contracts, but in even smaller quantities. A total of 2,537 long contracts and 1,284 short contracts were opened. Thus, the mood of the major players became more "bullish". On the other hand, it has not become more "bearish", which means that the prospects for the European currency remain wonderful. In general, during the last reporting week, more short-contracts were opened, but we are more interested in the data on the group of speculators.
Forecast for EUR/USD and recommendations for traders:
Sales of the pair are recommended when closing quotes under the level of 38.2% (1.2104) on the hourly chart with a target of 1.2046. It is recommended to buy the pair if the quotes close above the trend line on the hourly chart with the goals of 1.2151 and 1.2197.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy foreign currency, not for speculative profit, but to support current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
