To open long positions on EUR/USD, you need:
Absolutely nothing happened yesterday afternoon. There were no signals to enter the market as the intraday volatility was at the level of 28 points. Trading volume was also very low. The lack of benchmarks and important fundamental data ahead of a rather interesting Federal Reserve meeting forces traders to take a wait-and-see attitude.
Before talking about the prospects for the EUR/USD movement, let's see what happened in the futures market and how the Commitment of Traders (COT) positions changed. The COT report for March 9 clearly shows a sharp decline in long positions and a very large increase in short positions, which indicates a continued shift in the market towards sellers of risky assets. This is confirmed by the euro's decline, which we have seen since the end of February. Bond yields in many developed countries continue to sharply rise, which plays in 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 European Central Bank's recent meeting did not change the market, as the decisions made were not critical and did not affect investor sentiment in any way. It is best not to rush into euro purchases, but to wait for lower prices. The growth in the incidence of coronavirus is another factor of medium-term pressure on the euro. The slow vaccination program for the population is pushing the cancellation of quarantine measures to a later date. We can only expect an improvement in the economic outlook for the eurozone once restrictions are lifted and the service sector is restored, which will return the medium-term trend to strengthening EUR/USD. The COT report indicated that long non-commercial positions declined from 222,655 to 207,588, while short non-commercial positions rose from 96,667 to 105,624. As a result, the total non-commercial net position declined again for the fourth consecutive week, from 125,988 to 101,964. The weekly closing price was 1.1812 against 1.2048 a week earlier.
From a technical point of view, nothing has changed, since volatility was at a fairly low level yesterday. We can speak about regaining control of the market only after a breakthrough and once resistance at 1.1939 has been tested from top to bottom. A good signal for opening long positions could be formed at this level, in hopes to resume the bull market. Moving averages, playing on the side of sellers, also pass there. If the data on the index of sentiment in the business environment in Germany and the eurozone from the ZEW institute turn out to be better than economists' forecasts, then it will be possible to count on a larger increase in EUR/USD, in hopes for it to return to last week's high in the 1.1989 area, where I recommend taking profit. If the bulls are not active in the 1.1939 area, or the euro is under pressure again in the first half of the day, then it would be best to hold back from long positions until the test of the larger support at 1.1884, from which you can buy the euro immediately on a rebound, counting on an upward correction of 20-25 points within the day. The next major level is seen in the 1.1838 area.
To open short positions on EUR/USD, you need:
The euro will remain under pressure as long as trading is kept below 1.1939. Weak reports on inflation in Italy and ZEW indices may lead to forming a false breakout at this level, which will return pressure to the pair. In this case, the nearest target will be support at 1.1884, where I recommend taking profit. The next major support is seen around 1.1838, where bulls' activity can be seen. If the euro is growing and there is no activity in the 1.1939 area, then it would be best to hold back from short positions until a larger resistance at 1.1989 has been tested, from which you can sell EUR/USD immediately on a rebound, counting on a downward correction of 25-30 points within the day. The next major level is seen only around 1.2047.
Indicator signals:
Moving averages
Trading is under the 30 and 50 moving averages, which indicates the bears' attempt to maintain control of the market.
Note: The period and prices of moving averages are considered by the author on the H1 chart and differs from the general definition of the classic daily moving averages on the D1 daily chart.
Bollinger Bands
Volatility is very low, which does not provide entry points for the indicator.
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.
