To open long positions on EUR/USD, you need:
I paid attention to the 1.2075 level in my afternoon forecast and advised you to act on it. Let's take a look at the 5-minute chart and talk about what happened. If in the first half of the day we did not wait for a normal signal for opening long positions, then such a signal appeared during the US session, after a breakout and test of the 1.2075 level. However, unfortunately, it was not realized, and we never got to the designated goals. Weak fundamental data on the US economy contributed to the euro's growth as it rose above 1.2075, but there were no new buyers there.
Bulls will be focused on protecting support at 1.2075 today, but this will happen only if we receive good fundamentals for the eurozone countries. A large number of reports will be released today, this includes PMIs in the manufacturing sector and PMIs in the service sector. An improvement in these indicators for the month of February will enable the bulls to form a false breakout in the support area of 1.2075, which creates a good signal to open long positions in continuing the upward correction that appeared yesterday. In this case, you can count on an update of resistance at 1.2122, where I recommend taking profit. The 1.2166 high will be a distant target, the price can only surpass it after a breakout and consolidation at the 1.2122 level. If bulls are not active in the 1.2075 area, then it is best not to rush to buy, but wait for a downward correction to the support area of 1.2037, from where you can open long positions immediately on a rebound, counting on rising by 20-25 points within the day.
To open short positions on EUR/USD, you need:
The bears will look forward to regaining control over the 1.2075 level, but this requires a lot of work. A breakout and being able to test this area from the bottom up creates a good signal to open short positions in order to sustain the bear market and return the pair to a low of 1.2037, where I recommend taking profits. Disappointing fundamental reports on Germany and the eurozone may contribute to the realization of such a scenario. Moving averages also pass below the 1.2075 level, which also limits the euro's downside potential. We can expect a test of the 1.2003 low in case the pair sharply falls in the first half of the day. In the EUR/USD growth scenario, it is best to consider short positions on a rebound from a large resistance at 1.2122, counting on a downward correction of 20-25 points within the day.
The Commitment of Traders (COT) report for February 9 revealed an increase in short and long positions, which reflects the current situation. The equality of buyers and sellers clearly characterizes the entirety of last week, which is where the pair was, in a horizontal channel. It is important to note that any adequate decline in the EUR/USD pair has always been accompanied by quick buys, and the fact that the US dollar continues to be less and less in demand among investors has already been mentioned many times. Therefore, I think a more correct approach to the market is to buy the euro. The only problem for the euro is the lack of guidance from the European Central Bank and the risk of verbal intervention, which limits the growth potential. However, the demand for the euro will only increase with each significant downward correction in the pair. The COT report indicated that long non-commercial positions rose from 216,887 to 220,943, while short non-commercial positions rose from 79,884 to 80,721. As a result, the total non-commercial net position rose after last week's decline to 140,222 from 137,003. The weekly closing price was 1.2052 against 1.2067 a week earlier.
Indicator signals:
Moving averages
Trading is carried out above 30 and 50 moving averages, which indicates an attempt by the bulls to seize the initiative.
Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differs from the general definition of the classic daily moving averages on the daily D1 chart.
Bollinger Bands
A breakout of the upper border of the indicator in the 1.2100 area will lead to a new wave of euro growth. A break of the lower border at 1.2065 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. It is marked in yellow on the chart.
- Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
- MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
- Bollinger Bands (Bollinger Bands). Period 20
- Non-commercial 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 short and long positions of non-commercial traders.
