To open long positions on EURUSD, you need:
On Friday, only one signal was formed to enter the market further along with the bear market. Let's look at the 5-minute chart and figure out what happened. Many expected strong data on the US labor market, which exceeded all forecasts of economists. The breakthrough of the 1.1012 level and then the unsuccessful attempt of the bulls to go back, as well as a strong report on the change in the number of employed in the US non-agricultural sector - all this led to the formation of a signal to sell the euro. As a result, the pair collapsed by more than 100 points. Considering that the downward movement was very large, the absence of pullbacks and upward corrections did not allow the formation of additional entry points into short positions. And what were the entry points for the pound?
Today, another sale of the European currency took place in the Asian session, which almost led to an update of the 1.0800 level. The pressure on the euro will continue due to the aggravation of the geopolitical situation. Given Friday's data on the unemployment rate in the United States, it can be concluded that Federal Reserve Chairman Jerome Powell will soon take a tougher stance on the future monetary policy of the central bank. Several reports on the German and French economies are being released this morning, as well as the Sentix investor confidence indicator for the eurozone is being published. It is expected to decline very significantly in March this year. This is a very bad signal for the euro, which is not in the best position right now. An important task of the bulls for the first half of the day will be to protect the intermediate support of 1.0844, formed by the results of this morning's trading. The formation of a false breakout at this level forms the first entry point into long positions, counting on the pair's recovery to the area of 1.0884. However, to see a larger movement in EUR/USD, active actions of buyers and a breakthrough of this resistance are needed. Good data on changes in the volume of retail trade in Germany and the balance of foreign trade in France should help the bulls cope with this task. All this will lead to the growth of the euro in the first half of the day above 1.0884. A breakout and a top-down test of this level will give a buy signal and open the possibility for the pair to recover to the area of 1.0936. A breakdown of this range will also pause the bearish trend and open a direct road to the highs: 1.0978 and 1.1016, where I recommend fixing the profits. With the further aggravation of the geopolitical conflict, the demand for the US dollar will continue, and the absence of buyers at 1.0884 will not cause surprise. In this case, the optimal scenario for buying will be a false breakdown at 1.0801, but it is possible to open long positions on the euro immediately for a rebound from new annual lows: 1.0772 and 1.0728 with the aim of an upward correction of 20-25 points inside the day. At this rate, we can easily return to the lows of 2016.
To open short positions on EURUSD, you need:
The bears continued to push the euro down. But the merit here is no longer theirs. This is due to the deterioration of the global economy and the revision of forecasts for it in the negative direction. The sanctions and retaliatory measures imposed on Russia do not add confidence to investors in the future. Weak data on the eurozone today can be direct proof of this. In the event of a sharper deterioration of the eurozone investor confidence indicator, the bears will easily cope with the protection of the nearest resistance of 1.0884, and the formation of a false breakdown there will lead to the opening of new short positions to further lower the euro along with the trend to the area of the 1.0844 level. A breakdown of this area and a reverse test from the bottom up can take place very quickly, which will give an additional signal to open short positions already with the prospect of falling to new annual lows: 1.0801 and 1.0772. After their test, a direct road will open to 1.0728, where I recommend fixing the profits. In the case of a rise in the euro and the absence of bears at 1.0884, it is best not to rush with sales. The bulls may start acting more aggressively in the case of good reports on Germany, and a breakthrough of this level will pull the stop orders of Asian sellers. Therefore, the optimal scenario will be short positions when forming a false breakdown in the area of 1.0936, where the moving averages are playing on the sellers' side. You can sell EUR/USD immediately for a rebound from 1.0978, or even higher - around 1.1016 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 below 30 and 50 daily moving averages, which indicates a bear 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 average of the indicator in the area of 1.0900 will act as resistance. If the euro falls, the lower border in the area of 1.0825 will provide 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.
