To open long positions on EURUSD, you need to:
In the first half of the day, I paid attention to the level of 1.1931 and recommended entering the market from it. Let's look at the 5-minute chart and talk about what happened. The breakout of the level of 1.1933 did not occur immediately but after some time. A false breakout there should be excluded since the level was quickly "smeared". The reverse test of this area from the bottom up could hardly be considered as a sell signal. Therefore, the one who entered the short positions did the right thing. In the second half of the day, the technical picture changed slightly, but in general, the strategy remained the same.
It will be possible to talk about the return of the euro market by buyers under their control only after a breakout and a top-down test of the resistance of 1.1939. Only from this level will a good signal be formed to open long positions in the expectation of a resumption of the bull market. There are also moving averages that play on the side of sellers. In this case, you can count on a larger increase in EUR/USD with a return to the maximum of last week in the area of 1.1989, where I recommend fixing the profits. If the bulls do not show much activity in the area of 1.1939 or the pressure on the euro will continue in the second half of the day – it is best to postpone purchases until the test of larger support of 1.1884, from which you can buy the euro immediately for a rebound in the expectation of an upward correction and 20-25 points inside the day. The next major level is seen in the area of 1.1838.
To open short positions on EURUSD, you need to:
As long as trading is below 1.1939, the pressure on the euro will continue. The absence of important fundamental statistics in the second half of the day may increase the pressure on the pair. The nearest goal in this scenario will be the support of 1.1884, where I recommend fixing the profit. The next major support is seen around 1.1838. With growth and the formation of a false breakout in the resistance area of 1.1939, a signal will also be formed to open short positions in the continuation of the downward trend. If the bears do not show activity in the area of this level – it is best to postpone sales until the test of a larger resistance of 1.1989, from which you can sell the euro immediately for a rebound in the expectation of a downward correction of 25-30 points within the day. The next major level is visible only in the area of 1.2047.
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, but 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 week in a row 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 below 30 and 50 daily moving averages, which indicates continued pressure on the euro.
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
If the euro rises in the second half of the day, the average border of the indicator in the area of 1.1965 will act as a resistance.
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.
