To open long positions on EURUSD, you need:
In my morning forecast, I paid attention to the 1.1366 level and recommended making decisions on entering the market from it. Let's look at the 5-minute chart and figure out what happened. A breakout and consolidation above the resistance of 1.1366 with a reverse test from top to bottom - all this led to the formation of an excellent entry point into long positions, which I talked about a lot in the forecast for the first half of the day. Good data on the volume of industrial production in the eurozone only spurred traders to new purchases, which led to the movement of the euro up by more than 30 points from the entry point. In the afternoon, the technical picture changed slightly, but the strategy remained the same, as the trend remains upward. And what were the entry points for the pound this morning?
During the American session, more serious fundamental indicators are waiting for us, which may affect the direction of the EUR/USD pair and far from favoring euro buyers. The reports may affect the attitude of the Federal Reserve System to the issue of monetary policy, so I recommend that you pay great attention to them. The minutes of the January meeting of the Open Market Committee, which will be published in the evening, will also shed light on the degree of aggressiveness of the central bank in relation to interest rates. The most optimal scenario for buying the euro in the afternoon will be the formation of a false breakdown after a downward correction to the support area of 1.1368, just below which the moving averages are playing on the side of the bulls. An equally important task for the bulls will also be the next update of weekly highs with a resistance test of 1.1414. A breakthrough of this level, together with weak data on changes in the volume of retail trade in the United States and changes in industrial production, as well as a test of 1.1414 from above - all this will lead to an additional buy signal and open the possibility of recovery to the area of 1.1452 and 1.1491, where I recommend fixing the profits. Strong retail sales in the US, on the contrary, will increase future inflationary pressures. Therefore, if the pair declines during the American session and there is no activity at 1.1368, most likely, the bulls will begin to experience serious problems, since the inability to hold to this range may affect the formation of a new ascending channel. In this case, it is best to postpone purchases until 1.1325. However, I advise you to open long positions there when forming a false breakdown. You can buy the euro immediately for a rebound against the bear market from the level of 1.1283 - the minimum of this week. However, it will be possible to count on more than a rebound of 20-25 points within a day.
To open short positions on EURUSD, you need:
Sellers have missed the next resistance level and are not in a hurry to return to the market yet. Everyone is waiting for retail sales data, and they also expect higher activity after the publication of the January minutes of the Federal Reserve meeting. At the moment, there is no more real reason to sell risky assets. If the pair continues to grow, only the formation of a false breakdown at 1.1414 and weak retail sales in the US will increase pressure on EUR/USD, which will form an entry point into short positions to reduce to the area of a new support level of 1.1368. A breakdown and a test from the bottom up of this range will give an additional signal to open short positions already with the prospect of falling to a large minimum of 1.1325, below which you can reach the weekly support of 1.1283, where I recommend fixing profits. In the case of euro growth and the absence of bears at 1.1414, and the trend is still bullish, it is best not to rush with sales. The optimal scenario will be short positions when a false breakdown is formed at the maximum of 1.1452, above which only the only major monthly resistance remains - 1.1491. There will be active profit-taking on long positions from speculative players. Therefore, it is possible to sell EUR/USD from this level immediately for a rebound with the aim of a downward correction of 15-20 points.
The COT report (Commitment of Traders) for February 8 recorded the growth of long positions and the reduction of short ones. This report already takes into account the meeting of the European Central Bank, at which its president Christine Lagarde made it clear to all market participants that the regulator will act more aggressively if the observed picture with inflation does not change, or changes for the worse. Last week, officials from the ECB took a wait-and-see attitude, and a technical reversal of the bull market led to a decline in the EUR/USD pair. Demand for risky assets has also decreased due to the risk of a military conflict between Russia and Ukraine. However, a more weighty argument for the observed downward movement of the EUR/USD pair is the actions of the Federal Reserve System in relation to interest rates. On Monday, February 14, an extraordinary meeting was held, the results of which were preferred to be hidden from the public. This is even more adding fuel to the fire that is flaring up around high inflationary pressure in the United States. Some economists expect that the central bank may resort to more aggressive actions and raise rates immediately by 0.5% in March this year, rather than by 0.25%, as originally planned. This is a kind of bullish signal for the US dollar. The COT report indicates that long non-commercial positions increased from the level of 213,563 to the level of 218,973, while short non-commercial positions decreased from the level of 183,847 to the level of 180,131. This suggests that traders continue to build up long positions with every good decline in the European currency. At the end of the week, the total non-commercial net position increased slightly and amounted to 38,842 against 29,716. The weekly closing price jumped and amounted to 1.1441 against 1.1229 a week earlier.
Signals of indicators:
Moving averages
Trading is conducted above 30 and 50 daily moving averages, which indicates an attempt by euro buyers to continue the pair's growth.
Note: The period and prices of 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
In the case of a decline, the lower limit of the indicator around 1.1325 will act as support.
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.
