When to open long positions on EUR/USD:
US inflation came in line with market expectations. Although the pair swelled, there have been no signs of a new bull trend. Today, the bulls are likely to extend growth. However, it could be hard to do in the European session. The eurozone's industrial production, Italy's unemployment, and France's CPI are due today. These reports will be of little interest to the forex market. Therefore, we should focus on the nearest support level of 1.0727, which is in line with the bullish moving averages. A false breakout through the barrier will create a buy entry point with the target at the resistance level of 1.0769. An additional buy entry point will form if the price breaks and tests this mark to the upside ahead of US retail sales data. The target is seen at 1.0802. A breakout through it will trigger a row of bearish stop orders and make an additional signal with the target at 1.0834 where I am going to lock in profits. If EUR/USD goes down and there is no bullish activity at 1.0727, which is likely, the market will enter a correction, and the pressure on the pair will increase. A breakout through the level will cause a fall to the support level of 1.0692. Only a false breakout through it will generate a buy signal. The trading plan will also be to buy on a rebound from the 1.0654 low, or even lower, at 1.0614, allowing a bullish correction of 30 to 35 pips intraday.
When to open short positions on EUR/USD:
The bears should protect the nearest resistance level of 1.0769, which could be tested in the European session. The trading plan will be to sell after a false breakout, targeting the nearest support level of 1.0727. A breakout and a reverse test of this range may trigger a correction with an additional signal to sell at 1.0692 although the market will unlikely turn bearish. Consolidation below 1.0692 will lead to a steep fall to 1.0654 where I am going to lock in profits. In case of growth in EUR/USD in the European session and the absence of the bears at 1.0769, the trading plan will be to open short positions after a false breakout at 1.0802. On a rebound, EUR/USD could be sold at the 1.0834 high, allowing a bearish correction of 30 to 35 pips intraday.
Commitment of Traders
The COT report for February 21 logged a decrease in both long and short positions. In fact, the COT data from a month ago is of little interest at this point as it is not relevant due to the technical glitch the CFTC recently suffered. Waiting for fresh reports is all that's left. One of the main events of the week will be US inflation, which may persuade traders that the Fed will unlikely continue its aggressive stance on monetary policy. The SVB meltdown and risks of a collapse in the US banking sector will surely change the Fed's stance on rate hikes. According to the COT report, long non-commercial positions decreased by 160 to 236,414. Short non-commercial positions dropped by 1,322 to 71,346. The non-commercial net position came in at 165,038 versus 150,509. The weekly closing price fell to 1.0698 from 1.0742.
Indicator signals:
Moving averages
Trading is carried out above the 30-day and 50-day moving averages, indicating a bullish bias.
Note: The period and prices of moving averages are viewed by the author on the hourly chart and differ from the general definition of classic daily moving averages on the daily chart.
Bollinger Bands
Support stands at 1.0705, in line with the lower band.
Indicator description:
- Moving average (MA) determines the current trend by smoothing volatility and noise. Period 50. Colored yellow on the chart.
- Moving average (MA) determines the current trend by smoothing volatility and noise. Period 30. Colored green on the chart.
- Moving Average Convergence/Divergence (MACD). Fast EMA 12. Slow EMA 26. SMA 9.
- Bollinger Bands. Period 20
- Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements.
- Long non-commercial positions are the total long position of non-commercial traders.
- Non-commercial short positions are the total short position of non-commercial traders.
- Total non-commercial net position is the difference between the short and long positions of non-commercial traders.
