To open long positions on EURUSD, you need:
In my morning forecast, I paid attention to the level of 1.0955 and recommended making decisions on entering the market. Let's look at the 5-minute chart and figure out what happened. Fundamental statistics have nothing to do with the positive that is currently observed in the market, which stimulates demand for risky assets. Most likely, investors expect further positive negotiations between Russia and Ukraine. During the European session, it was not possible to break above 1.0955 on the first attempt, which led to the formation of a false breakdown and a signal to sell the euro. However, I did not see a good downward movement. After some time, the pair continued to grow, which led to a breakdown and an exit above 1.0955. Unfortunately, the reverse test from top to bottom of this level, which I marked on the chart with blue lines, did not happen - just like there was any buy signal. In the afternoon, the technical picture changed. And what were the entry points for the pound this morning?
The fact that euro buyers have followed the bears' stop orders and have already achieved weekly highs indicates good investor sentiment, which also preserves the prospect of continued EUR/USD growth, albeit in the short term. As for the statistics for the second half of the day, there is nothing that could attract attention and negatively affect the European currency, playing in favor of the US dollar. The level of vacancies and labor turnover from the US Bureau of Labor Statistics and the change in the volume of crude oil reserves according to API data is all that awaits us during the American session. Against this background, euro buyers have excellent chances for continued growth. An important task of the bulls for the American session will be to protect the new support of 1.0938, formed in the first half of the day. The decline of the euro and the formation of a false breakdown there after the release of strong data on the American economy will allow those who missed the morning movement to rehabilitate themselves and enter the market at attractive prices. It is possible to count on a larger recovery of EUR/USD only after the smoothing of geopolitical tensions and active actions of buyers at the base of the 10th figure. A breakout of this range may even stop the bearish trend by pinching the pair in a wide side channel. The reverse test of 1.1004 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 1.096. A more distant target will be the 1.1141 area, where I recommend fixing the profits. In the event of an aggravation of the geopolitical situation and new sanctions against Russia by the EU and the United States, pressure on the euro will quickly return. With a decline and lack of activity at 1.0938, traders will begin to close long positions, which will only increase the pressure on the pair. Therefore, it is best to postpone purchases until a false breakdown in the support area of 1.0879, where the moving averages are playing on the side of the bulls. You can buy the euro immediately for a rebound from this week's low in the area of 1.0810, or even lower - in the area of 1.0772 with the aim of an upward correction of 20-25 points within the day.
To open short positions on EURUSD, you need:
Sellers tried to offer something in the first half of the day after weak data on changes in the volume of industrial production in Italy, but it did not work out to achieve a serious fall in the euro. Tomorrow, we will know the data on inflation in the US, so those who were in a good position preferred to leave the market and sit on the sidelines. The dollar will continue to be supported by the risk of a more aggressive Fed policy in the fight against inflation, so the current upward correction does not seem so sad to the bears. An important task for sellers in the second half will be to protect the resistance of 1.1004. 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 against the background of strong data on the American economy - all this will be a signal to open short positions to further reduce EUR/USD on a bearish trend to the area of 1.0938. The breakdown of this area will allow sellers to capture the market completely. However, before talking about the surrender of the bulls, it would not hurt to update the minimum during the American session around 1.0879. 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 1.0810 and 1.0772, where I recommend fixing the profits. Under the scenario of the euro rising during the American session and the absence of bears at 1.1004, 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 1.1052. You can sell EUR/USD immediately for a rebound from 1.096, or even higher - around 1.1141 with the aim of a downward correction of 15-20 points.
In the context of the ongoing tough geopolitical conflict that has affected almost the whole world, it makes no sense to talk about what position investors held a week ago since everything is changing at lightning speed. The data that was yesterday no longer have any significance today, since no one knows how the sanctions imposed by the United States and EU countries will affect the Russian economy, as well as what the conflict between Russia and Ukraine will eventually lead to. The main question is how long it will last. Against this background, it does not matter much 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, the markets will fly down again. Now Russia and Ukraine have sat down at the negotiating table, and much will depend on the results of these meetings. This week, the European Central Bank will also hold a meeting and important February data on US inflation will be released, which will lead to a surge in volatility, but it is unlikely to correct the situation in favor of buyers of risky assets. I recommend continuing to buy a dollar. 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. The COT report indicates that long non-commercial positions increased from the level of 214,195 to the level of 228,385, while short non-commercial positions increased from the level of 154,163 to the level of 163,446. At the end of the week, the total non-commercial net position increased to 64,939 against 59,306. The weekly closing price dropped from 1.1309 to 1.1214.
Signals of indicators:
Moving averages
Trading is conducted above 30 and 50 daily moving averages, which indicates the continuation of the upward correction of the pair.
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.
