EUR/USD 1H
The euro/dollar pair was trading quite calmly again on the hourly timeframe on February 23. The pair's quotes were mainly decreasing within the framework of a new round of downward correction during the day. We have formed an upward channel that supports bull traders and maintains the current upward trend. Therefore, long positions are still more relevant. Bears remain rather weak and are unable to start a new downward trend. And, to be honest, we do not see any special reasons for the dollar's growth. Of course, this does not mean that the US currency cannot grow at all now. However, if we take those global fundamental factors that brought the currency pair to current levels into account, the prospects for the dollar remain vague in 2021. In our last review, we recommended selling the pair if the price settles below the critical line. No signal generated over the past day. We advised you to buy the euro in case the price clearly overcomes the extremum level of 1.2145 and you can aim for 1.2183. The price fell short of this level by only a few points, so, at least, traders could close this deal at breakeven.
EUR/USD 15M
The lower linear regression channel turned to the downside on the 15-minute timeframe. Thus, the upward trend is questioned in the most short term. The bulls failed to overcome the resistance level of 1.2183, so now, within the framework of the correction, the pair's quotes may drop to the Kijun-sen line.
COT report
The EUR/USD pair rose by 70 points during the last reporting week (February 9-15). Volatility during this period of time was practically minimal. In the chart above, you can see that the pair, in principle, has not significantly decreased over the past weeks. We are constantly talking about a corrective January, but if you look at the chart, it becomes clear that this correction, compared to the entire 11-month upward trend, is simply nothing. A banal rollback. Thus, in general, we can conclude that market participants still do not favor the dollar and do not believe in it. Furthermore, the Commitment of Traders (COT) report from two weeks ago recorded a sharp drop in the number of Buy-contracts (longs) for the "non-commercial" group of traders. Then the net position of non-commercial traders dropped 33,000 contracts at once. It seems to be a good start for a downward trend, but the following week the COT report recorded an increase in the net position of major players, and the latest report that was released this Friday showed changes, albeit minimal, in favor of the bulls. That is, professional traders have taken up buying the euro once again. Around 2,500 new buy contracts were opened, as well as 1,300 Sell-contracts (shorts). The changes, respectively, are minimal and do not greatly affect the overall picture of the state of affairs. Thus, the overall picture remains in favor of the bulls, as more than 220,000 buy contracts and only 84,000 sell contracts remain open. The indicators below the chart clearly show that the trend is no longer becoming bearish. The green and red lines of the first indicator reflecting the net positions of the groups of traders "non-commercial" and "commercial" do not converge, therefore the current trend remains in effect.
The European Union published a report on inflation, which remained unchanged in January at 0.9% y/y. Recall that deflation was recorded in the eurozone a month ago, which is very bad for economic recovery. The market ignored yesterday's inflation report if only because the forecasted, previous and actual values coincided. The US consumer confidence indicator slightly exceeded the forecasted values and reached 91.3, however, traders don't normally react to it, and now, when 90% of macroeconomic statistics are ignored, even more so. Thus, we can say that the foundation and macroeconomics had no impact on the market.
No major speeches or reports scheduled in the European Union on Wednesday, and Federal Reserve Chairman Jerome Powell's second congressional speech will take place in the United States, this time at the Banking Committee. Usually the second speech is no different from the first. Thus, if Powell did not report anything important and interesting yesterday, then today he is also unlikely to do so. Take note that 80% of all speeches by the head of the central bank do not carry any fundamentally new information
We have two trading ideas for February 24:
1) Buyers continue to keep the initiative in their hands. Thus, we recommend opening new long positions while aiming for 1.2183 and 1.2190 if traders manage to execute a clear rebound from the lower line of the rising channel. Take Profit in this case can be up to 50 points, which is not so bad considering the current volatility values. You can also consider longs while aiming for 1.2145 with a new rebound from Kijun-sen (but in this case with small lots).
2) Bears let go of the initiative again, as they let the price go above the critical line. You are advised to open short positions if the price settles below the rising channel while aiming for 1.2111 and the Kijun-sen line (1.2101). Take Profit in this case can be up to 30 points.
Forecast and trading signals for GBP/USD
Explanations for illustrations:
Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.
Support and resistance areas are areas from which the price has repeatedly rebounded off.
Yellow lines are trend lines, trend channels and any other technical patterns.
Indicator 1 on the COT charts is the size of the net position of each category of traders.
Indicator 2 on the COT charts is the size of the net position for the "non-commercial" group.
