EUR/USD 5M
The EUR/USD pair traded rather boringly on March 8. If you try to describe this movement with the least amount of words, you will get the following: the price moderately fell throughout the day. The downward movement did not stop in the Asian session, or in the European one even in the US session. As a result, the EUR/USD pair dropped to the correction level of 1.1831 by the end of the day, not reaching it by only 12 points. Not a single trading signal was formed during the day and no important fundamental or macroeconomic event either. Thus, traders simply had nothing to react to. The most interesting thing is that traders could have been stuck with short positions since Friday, several signals were generated at once since March 5. Traders could close all positions at the end of the trading day, or leave them on Monday. In the second case, there would be 80 points in profit. However, if such positions were not opened, then no one will blame traders either. You should understand that the pound/dollar pair traded more logically and reasonably (flat) on Monday, since there was no important foundation and macroeconomics yesterday. But at the same time, the euro continued to fall for some reason.
EUR/USD 1H
On the hourly timeframe, we can clearly see that the pair did not stop declining for a minute. Thus, there are already serious questions about the euro, which until now has been traded, from our point of view, quite logically. What is the reason for such a strong and almost recoilless fall, if there has been no particularly important news from the eurozone recently, and US factors do not equally affect the euro/dollar and pound/dollar pairs? However, this is a rhetorical question. Only one level can actually serve as a signal aggregator. This is the support level of 1.1831. Rebounding from it - can provoke a round of an upward movement (very logical, from our point of view), surpassing it would mean a succeeding fall. A report on GDP for the fourth quarter in the European Union will be published today, however, we believe that there will not be much reaction to it. However, this is still the only report of the day and so it should not be overlooked. In general, we continue to trade, as before - along important levels and lines. Do not forget to set Stop Loss to breakeven when passing 15-20 points in the right direction.
COT report
Recall that the EUR/USD pair fell by 110 points during the last reporting week (February 23 -March 1). In the last couple of months, we have supported the option of the continuation of the global uptrend, and this scenario was partly confirmed by the COT reports. However, we would like to remind you that either a strong correction or a new downward trend has been brewing since September 2020. This conclusion is solely based 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 "non-commercial" and "commercial" groups of traders, 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 the trend along with them. 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 this time, starting in September, the big players, as they say, walked along the edge of the abyss. The green and red lines slightly narrowed, 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, professional traders closed 8,000 buy contracts and opened 8,000 sell contracts during the reporting week. 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