EUR/USD 5M
The EUR/USD pair was very, very interesting on March 5. On the 5-minute chart, we will deal with all aspects of the movement and signals that were formed during the last trading day. So, let's start with the fact that last Friday's downward movement did not stop even at night. In the Asian trading session, although the decline was sluggish, it still continued. Little has changed since the European trading session opened. On the contrary, the bears were active and made a dash downward, thanks to which the price broke the support level of 1.1944 and the level of 1.1952. Thus, the first sell signal for the day was generated. I would like to note right away that despite the fact that the pair has been falling all day, the downward movement cannot be called strong. On the 5-minute timeframe, you can see that the price regularly rolled back up. But back to the sell signal. Traders could open sell orders in the area of the first rectangle. Further - more interesting. During the European session, the price returned to the support level of 1.1944 twice and bounced off this level. Of course, two additional sell deals should not have been opened, but the initial sell signal was not canceled, and the bears continued to stubbornly try to take the pair further down. With the opening of the US trading session, nothing has changed either. At the very beginning, the US published the unemployment rate, which fell from 6.3% to 6.2%, as well as NonFarm Payrolls, the number of which increased by 379,000 under much more modest forecasts. Thus, the US dollar received strong support again and the pair fell down another 40 points. This movement did not last long. The bulls almost immediately pulled the pair from the day's lows back to the 1.1944 level, from which there was a third rebound. Thus, during the day, traders could trade short and earn 20-30 points, since the pair did not reach the target level.
EUR/USD 1H
On the hourly timeframe, we can observe the general picture of the state of affairs. The bears tried to continue moving down all Friday and, in principle, they managed to maintain the downward trend. The trend line clearly signals the continued downward trend. Macroeconomic statistics that were published last Friday, which at first glance became the main driver of the pair's quotes fall, in practice had only a small impact. The speech of the Minister of Finance Janet Yellen did not give any important and interesting information to the markets at all. And the markets themselves were much more interested in studying changes in the yield of US Treasuries than in actual statistics. As a result, there is a trend and it continues. On Monday, there will be no macroeconomic statistics in either the EU or the US. Thus, traders can again actively trade based on the growth factor in the yield of Treasury bonds in the United States. Or they can finally forget about them and start, for example, a new round of upward correction. Recall that the US Senate approved a new stimulus package for the American economy, so the dollar may resume a strong decline in the coming weeks. With regard to trade, the closest levels from which one can, as they say, "dance", remain 1.1944 and 1.1952. Rebounding from them will provoke a new downward movement, and overcoming - growth to the trend line and the Kijun-sen line. In the first case, you can reopen short positions, in the second - long.
COT report
Recall that during the last reporting week (February 23 -March 1) the EUR/USD pair fell by 110 points. In the last couple of months, we have supported the option with the continuation of the global uptrend, and this scenario was partly confirmed by the COT reports. However, we would like to remind you that since September last year, either a strong correction in the EUR/USD pair has been brewing, or a new downward trend. This conclusion is based solely on the COT reports. Everything is simple: the green and red lines of the first indicator in the chart, which represent the net positions of the groups of traders "Non-commercial" and "Commercial", reached the point of maximum divergence back in September. Such points are considered either points of the end of the trend, or harbingers of its completion. If these lines begin to move towards each other, it means that the mood of non-commercial and commercial traders is changing to the opposite, and with them the trend. However, the pandemic and the crisis, as well as the unprecedented actions of the central banks, which caused the strongest growth in the money supply and, as a result, the imbalance between the money supply of various currencies, ultimately led to the fact that this phenomenon did not cause a trend reversal. However, all the time, starting in September, the big players, as they say, walked along the edge of the abyss. The green and red lines narrowed a little, then diverged again, that is, this signal began to have a delayed execution. Therefore, solely from the COT reports, we can say that now is an excellent time to continue forming a new downward trend. Moreover, during the reporting week, professional traders closed 8,000 buy contracts and opened 8,000 sell contracts. Thus, their net position decreased by 16,000, that is, their mood became more bearish.
Explanations for illustrations:
Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.
Support and resistance areas are areas from which the price has repeatedly rebounded off.
Yellow lines are trend lines, trend channels and any other technical patterns.
Indicator 1 on the COT charts is the size of the net position of each category of traders.
Indicator 2 on the COT charts is the size of the net position for the "non-commercial" group.
The material has been provided by InstaForex Company - www.instaforex.com