To open long positions on EURUSD, you need:
In my morning forecast, I paid attention to the level of 1.1102 and recommended making decisions on entering the market. Let's look at the 5-minute chart and figure out what happened. The data released today on indices for the services sector of the eurozone countries put pressure on the euro, as the reduction in indicators will negatively affect the growth rate of the economy in the spring of this year. The return to the level of 1.1102 and its reverse test from the bottom up, which I discussed in detail in my morning forecast - all this led to the formation of a signal to sell the euro. As a result, the pair fell by 25 points, after which data on producer prices in the eurozone came out, which forced the bears to stop. And what were the entry points for the pound this morning?
The meeting between Russia and Ukraine will not take place in the near future, which also returned pressure on the EUR/USD pair in the first half of the day. In the afternoon, several fundamental statistics on the American economy are released, and Federal Reserve Chairman Jerome Powell also speaks, which may lead to another wave of dollar growth. Despite yesterday's statements by the head of the Fed, the situation with inflation in the United States is likely to continue to deteriorate, which will force the central bank to act more aggressively. An important task of the bulls for the American session will be to protect the nearest support of 1.1062, which is the minimum of this month and below which buyers will start serious problems. The formation of a false breakdown, in the case of a decline in the pair to 1.1062 after the release of strong data on the number of initial applications for unemployment benefits in the US and the index of business activity in the services sector from ISM, will allow euro buyers to rehabilitate, which will give an entry point into long positions. It is possible to count on a larger recovery of EUR/USD only after the smoothing of military tensions and active actions of buyers in the area of 1.1102 - a kind of middle of the side channel viewed in the last few days. There are moving averages playing on the side of the bears. A breakthrough and a test of this range during the release of the weak US and European data will lead to a buy signal and open up the possibility of recovery to the area of 1.1141. A more distant target will be the 1.1184 area, where I recommend fixing the profits. However, as I noted above, geopolitical tensions will affect the euro, and the parties' refusal to negotiate will only worsen the military conflict. If there is no activity at 1.1062, traders will start closing long positions, which will only increase the pressure on the pair. Therefore, it is best to postpone purchases until a false breakdown in the area of a new low of 1.1035, but it is possible to gain long positions on the euro immediately for a rebound from the level of 1.0994, or even lower - around 1.0957 with the aim of an upward correction of 20-25 points within a day.
To open short positions on EURUSD, you need:
Sellers pushed through the middle of the side channel, but as we can see, it has not yet reached the active fall of the euro. An important task for the bears in the afternoon will be to protect the resistance of 1.1102. The formation of a false breakdown at this level, as well as strong data on the labor market and activity in the US services sector, together with negative news about Ukraine, will all be a signal to open short positions to further reduce EUR/USD on a bearish trend to the area of 1.1035. The breakdown of this area is very important since in this scenario the bears will act more actively. A reverse test from the bottom up of 1.1035 will give an additional signal to open short positions already with the prospect of falling to a minimum of 1.0994. There is also 1.0957 very close, where I recommend fixing the profits. Under the scenario of euro growth during the American session and the absence of bears at 1.1102, nothing terrible will happen, but it is best not to rush with sales. The optimal scenario will be short positions when forming a false breakdown in the area of 1.1141. You can sell EUR/USD immediately for a rebound from 1.1184, or even higher - around 1.1229 with the aim of a downward correction of 15-20 points.
The COT report (Commitment of Traders) for February 22 again recorded a reduction in both long and short positions, which led to an increase in the positive delta, as there were much fewer short positions. In the context of a tough geopolitical conflict that has affected almost the whole world, it makes no sense to talk about what the policy of the European Central Bank or the Federal Reserve System will be since, in the event of an aggravation of the military conflict, it will make no difference. Now Russia and Ukraine have sat down at the negotiating table, and much will depend on the results of these meetings - there will be a lot of them. In the current conditions, it will not be too correct to consider the COT report, especially considering its secondary information for the trader. I advise you to be quite careful about risky assets and buy euros only as the tense relations between Russia, Ukraine, the EU, and the USA weaken. Any new sanctions actions against the Russian Federation will have serious economic consequences, which will affect the financial markets, as well as affect not only the Russian ruble but also the European currency. This will happen because of Russia's retaliatory measures against sanctions, which the EU will not like - an additional factor of pressure on the euro. The COT report indicates that long non-commercial positions decreased very slightly from the level of 217,899 to the level of 214,195, while short non-commercial positions decreased from the level of 170,318 to the level of 155,889. This suggests that although fewer people are willing to sell euros, there are no more buyers from this. It seems that traders prefer to sit on the sidelines of those events that are now rapidly gaining momentum. At the end of the week, the total non-commercial net position increased to 59,306 against 47,581. The weekly closing price remained unchanged at 1.1309 versus 1.1305 a week earlier.
Signals of indicators:
Moving averages
Trading is conducted below 30 and 50 daily moving averages, which indicates the bearish nature of the market.
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 growth, the upper limit of the indicator in the area of 1.1141 will act as resistance. A breakthrough of the lower limit of the indicator in the area of 1.1070 will increase pressure on 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.
