To open long positions on EURUSD, you need:
In my morning forecast, I paid attention to the 1.0884 level and recommended making decisions on entering the market from it. Let's look at the 5-minute chart and figure out what happened. Good statistics on Germany allowed euro buyers to stay within the side channel, and news from Ukraine led to a sharp increase in EUR/USD and a breakdown of 1.0884. However, after the reverse test from top to bottom of this level, the bulls could not cope and did not stay above 1.0884. For this reason, there was no buy signal. In the afternoon, the technical picture changed slightly. And what were the entry points for the pound this morning?
Today there was news that in his interview with ABC, the President of Ukraine Zelensky declared his readiness to talk with Russia about the Crimea and Donbas: "We can discuss this and find a compromise on how people will live there further. Regarding NATO, I cooled down to this issue after we realized that NATO is not ready to accept Ukraine. The alliance is afraid of contradictory things and confrontation with the Russian Federation," Volodymyr Zelensky added in an interview. These statements were positively received by the market, as they can reduce the degree of military operations on the territory of Ukraine, tightly seating the parties at the negotiating table. As for the statistics for the second half of the day, reports are being prepared on the small business optimism indicator from the US NFIB and the foreign trade balance, which will not play an important role in the further direction of the pair, so I advise you to stick to trading within the side channel. An important task of the bulls for the American session will be to protect the new support of 1.0857, formed in the first half of the day. The formation of a false breakdown in the event of a decline in the pair to 1.0857 after the release of strong data on the US economy will allow euro buyers to rehabilitate themselves, 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 1.0918 (the former level of 1.0884), it was not possible to get above that in the morning. A break in this range, although it will not stop the bear market, will put it on pause. A reverse test of 1.0918 from top to bottom during the release of US data will lead to a buy signal and open up the possibility of recovery to the area of 1.0978. A more distant target will be the 1.1016 area, where I recommend fixing the profits. As I noted above, the geopolitical situation affects the euro and any news leads to a surge in volatility. In case of a decline and lack of activity at 1.0857, and there are moving averages playing on the buyers' side, traders will start closing long positions again, which will only increase the pressure on the pair. Therefore, it is best to postpone purchases until a false breakdown in the area of this week's minimum - 1.0810. You can buy the euro immediately for a rebound from the level of 1.0772, or even lower - around 1.0728 with the aim of an upward correction of 20-25 points within the day.
To open short positions on EURUSD, you need:
Sellers did not allow the euro to gain momentum and again defended the large resistance of 1.0920, near which bears are active for the second day in a row. The dollar is supported by the risk of a more aggressive Fed policy in the fight against inflation, which in February may even reach the 8% level. The important task of the bears in the second half remains to protect the resistance of 1.0918. The formation of a false breakdown at this level in the event of another attempt by the bulls to prove something to the market, as well as strong data on the balance of the US foreign trade balance will be a signal to open short positions to further reduce the EUR/USD bearish trend in the area of 1.0857. The breakdown of this area will allow sellers to retain full control over the market. It will not hurt to update the weekly lows during the American session around 1.0810. A reverse test from the bottom up of this range will give an additional signal to open short positions already with the prospect of falling to the lows: 1.0772 and 1.0728, where I recommend fixing the profits. Under the scenario of the euro rising during the American session and the absence of bears at 1.0918, this will cause serious damage to the downward trend. In this case, it is best to take your time with sales. The optimal scenario will be short positions when forming a false breakdown in the area of 1.0978. You can sell EUR/USD immediately on a rebound from 1.1016, 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 against 1.1305 a week earlier.
Signals of indicators:
Moving averages
Trading is conducted slightly above 30 and 50 daily moving averages, which indicates attempts by buyers to turn the market around.
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
A breakthrough of the lower limit of the indicator in the area of 1.0850 will increase pressure on the euro. A breakthrough of the upper limit of the indicator in the area of 1.0895 will lead to a new wave of growth of the pair.
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.
