To open long positions on EURUSD, you need to:
Nothing happened in the first half of the day. The expectation of important reports on inflation in the US is holding back the appetite of traders, as the market may turn around. Let's look at the 5-minute chart and talk about what happened. The only test of the resistance of 1.1905, which I paid attention to in the morning forecast, did not allow me to form the necessary false breakout of this level, which crossed out my plans to open short positions. There were no other tests of the levels, so the focus remains on this resistance.
Data on inflation in the US can shake up the markets, so it is very important not to rush to enter after the report at the moment of momentum but to wait for the formation of a good point for opening positions. The strategy for the US session remains the same: a breakout and a test of the level of 1.1905 from top to bottom forms a buy signal in the expectation of continued growth of EUR/USD to the resistance of 1.1956, where I recommend taking the profits. A further level will be the area of 1.2000, however, it will be available only in the case of weaker data on inflationary pressure in the United States. In the case of a decline in the euro in the second half of the day, you can expect the formation of a false breakdown in the support area of 1.1855 and only then open long positions in the continuation of the upward correction. There is also the lower border of the correction channel, which was formed yesterday. The lack of bull activity in the support area of 1.1855 may increase the pressure on the pair. In this case, I recommend postponing purchases until the test of a larger minimum of 1.1804, from which you can open long positions immediately for a rebound, based on an upward trend of 25-30 points within the day.
To open short positions on EURUSD, you need to:
Only the formation of a false breakout and a return to the level of 1.1905 forms a signal to open short positions since, during the first test of this area in the first half of the day, there were no particularly willing to sell the euro. If there is no activity at this level, I recommend postponing sales immediately for a rebound from the larger resistance of 1.1956, from where you can open short positions in the euro to move down by 25-30 points within the day. With very bad data on inflation in the US, there may be a rapid growth of EUR/USD to the maximum of 1.2000, so be careful with sales. An equally important task for the bears will be to regain control of the support of 1.1855, which was formed yesterday in the first half of the day. A breakout and a test of this range from the bottom up will form a good entry point into short positions to update the monthly minimum in the area of 1.1804, where I recommend taking the profits. The next major support is located in the area of 1.1749.
Let me remind you that the COT report (Commitment of Traders) for March 2 clearly shows how there is a sharp reduction in long positions and a very large increase in short ones, which indicates a clear shift in the market towards sellers of risky assets. This is confirmed by the chart of the fall of the euro, which we are seeing for the third week. This time, it was not possible to quickly win back another major decline of the pair down. The sharp rise in bond yields of many developed countries continues, which plays in favor of the US dollar, as investors expect that the United States will be the first to start raising interest rates, which makes the US dollar more attractive. The recent approval by the US Senate of a new aid package and a $ 1,400 payment to all Americans affected by the pandemic makes risky assets even less attractive.
Therefore, it is better not to rush to buy euros but to wait for lower prices. A good plus for the euro will be the moment when European countries begin to actively curtail quarantine and isolation measures: Germany has already announced its plan in this direction, however, it has not yet come to the point. It is also necessary to wait for the moment when the service sector will start working again in full force, which will lead to an improvement in the economic prospects and also strengthen the EUR/USD pair. The COT report shows that long non-profit positions declined to the level of 222,655 from the level of 228,501, while short non-profit positions increased from the level of 90,136 to the level of 96,667. As a result, the total non-profit net position declined again for the third consecutive week to 125,988 from 138,365. The weekly closing price was 1.2048 against 1.2164 a week earlier.
Signals of indicators:
Moving averages
Trading is conducted around 30 and 50 daily moving averages, which indicates market uncertainty before the release of important fundamental data.
Note: The period and prices of the moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
Bollinger Bands
A break of the upper limit of the indicator in the area of 1.1905 will lead to a new wave of decline in the euro.
Description of indicators
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
- MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
- Bollinger Bands (Bollinger Bands). Period 20
- Non-profit 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 the short and long positions of non-commercial traders.
