To open long positions on EUR/USD, you need:
There were no new deals last Friday afternoon, as well as normal signals to enter the market. Let's take a look at the 5 minute chart and talk about what happened. The bulls tried to return to the market during the European session, during the first test of the 1.1933 area, but did not show much zeal - as a result, the euro kept falling with greater force. I missed the entry point for short positions, as the normal reverse test of the 1.1933 level did not take place. A similar situation was returning to this level during the US trading: having smeared the level of 1.1933, the bulls tried to form a more powerful upward correction, but nothing came of it.
The EUR/USD pair's succeeding growth will depend on how active the bulls are. The main target for the first half of the day is to break through resistance at 1.1989. Testing this level from top to bottom creates a new entry point into long positions, counting on the renewal of highs at 1.2047 and 1.2109. However, strong fundamental reports are necessary in order to move to these levels, which we dont have for today. If bulls are not active in the 1.1989 area, then I recommend waiting for EUR/USD to fall and open long positions after a false breakout is formed in the 1.1933 support area. Larger support can be seen a little lower in the 1.1884 area, from where you can buy EUR/USD immediately on a rebound, counting on an upward correction of 25-30 points within the day.
To open short positions on EUR/USD, you need:
Returning to the area below the 1.1933 level creates a signal to open short positions. But, before selling the euro below 1.1933, then I recommend waiting for this area to be tested from the bottom up. The absence of important fundamental statistics may play on the side of the euro sellers, therefore, after the breakdown of the support at 1.1933, one can count on the renewal of the low at 1.1884, where I recommend taking profits. The next major low is seen around 1.1838. If the euro grows in the first half of the day, then I recommend not to rush to sell: forming a false breakout in the resistance area of 1.1989 will lead to creating the first signal to open short positions. If traders are not active at this level, then it is best to hold back from short positions until the resistance test of 1.2047, from which you can open short positions in euros immediately on a rebound, counting on a downward correction down by 25-30 points within the day.
The Commitment of Traders (COT) report for March 2 revealed a sharp decline in long positions and a very large increase in short positions, which indicates a clear shift in the market towards sellers of risky assets. This is confirmed by the graph of the euro decline, which we have been observing for the third week. This time, it was not possible to quickly win back the next large decline in the pair. The sharp rise in bond yields in many developed countries continues, which plays in the favor of the dollar, as investors expect the United States to be the first to start raising interest rates, which makes the greenback more attractive. The recent approval by the US Senate of a new bailout package and a $1,400 payment to all Americans affected by the pandemic makes risky assets even less attractive. Therefore, it is better not to rush to buy euros, but to wait for lower prices. A good advantage for the euro will be the moment when the active curtailment of quarantine and isolation measures begins in European countries: Germany has already announced its plan in this direction, but it has not yet come to the point. It is also necessary to wait for the moment when the service sector will start working in full force again, which will lead to an improved economic outlook and also strengthen the EUR/USD pair. The COT report indicated that long non-commercial positions declined from 228,501 to 222,655, while short non-commercial positions rose from 90,136 to 96,667. As a result, the total non-commercial net position declined again for the third consecutive week, from 138,365 to 125,988. The weekly closing price was 1.2048 against 1.2164 a week earlier.
Indicator signals:
Moving averages
Trading is carried out in the area of 30 and 50 moving averages, which indicates market uncertainty regarding direction.
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 area of 1.1965 will lead to a new wave of growth for the euro. A break of the lower border of the indicator in the area of 1.1915 will increase the pressure on the pair.
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.
