To open long positions on EUR/USD, you need:
Judging by what is happening now: big players are returning to the market and volatility will only increase. Nothing interesting happened yesterday morning, but the US session was much more intriguing. Let's take a look at the 5-minute chart and break down the trades. Forming a false breakout and returning to the area below 1.2178 created a signal for short positions, but this did not lead to a normal downward movement. Then the price broke through resistance at 1.2178, however, I did not wait for this level to be tested from the reverse side and was forced to miss growth to resistance at 1.2220. Selling on the rebound from this level resulted in a downward correction by 11 points, afterwards the euro continued to rise. After the consolidation and the reverse test of the 1.2220 level (where I advised you to buy the euro), a signal for entering the market appeared. The highest upward movement from this level was 25 points. A report from America came out during the middle of the US session, which turned out to be much better than economists' forecasts, which ultimately provoked a fall in the euro. However, after surpassing the 1.2220 area, the reverse test of this level did not take place, so I was forced to miss the pair's downward movement to support at 1.2178.
Now the technical picture has changed a lot. And although it is too early for euro bulls to panic, they should try to regain control over resistance at 1.2190 as soon as possible. This can be done only if we receive good reports on the growth of spending and the consumer price index of the eurozone countries. Consolidation and being able to test this level from top to bottom creates an excellent entry point into long positions. In this case, we can count on returning to resistance at 1.2239, where I recommend taking profits. The succeeding target will be the high at 1.2294. In case EUR/USD falls in the first half of the day, it is best to wait for a false breakout at the 1.2140 level, which has already been tested in today's Asian session, and then you can open long positions as the pair continues to rise. If the euro is still under pressure, and the bulls are not active in the 1.2140 area, then I recommend holding back from buying for a rebound until support at 1.2093 has been tested, from where you can count on an upward correction by 20-25 points within the day.
To open short positions on EUR/USD, you need:
The bears are trying to get the market under their control, but yesterday's drop is nothing more than a slight downward correction in the pair. It is still too early to talk about any new trend. Sellers of the euro should prove themselves at the 1.2190 level for this. Forming a false breakdown there, along with a disappointing report on the eurozone, will surely increase the pressure on the pair, which will lead to a new downward movement to the 1.2140 level. Consolidation and being able to test this area from the bottom up will create another entry point to short positions in hopes to push the pair to a low like 1.2093, where I recommend taking profits. The 1.2037 level will be a succeeding target. In case EUR/USD grows above resistance at 1.2190, and there we also have moving averages playing on the side of the bears, then it is best not to rush to sell, but wait for this month's high in the 1.2239 region to be tested and open short positions from there while counting on a decline of 20-25 points within the day.
The Commitment of Traders (COT) report for February 16 revealed that there were no significant changes in the positions of large players, which once again indicates the temporary equilibrium of the pair before a new wave of growth this spring. The major decline from the previous week was won back, and this confirms the theory that the demand for the US dollar continues to decrease among investors. Therefore, a more correct approach to the market is to buy the euro for the medium term. A good factor for the euro would be the moment when European countries begin to actively roll back quarantine and isolation measures, and the services 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 rose from 220,943 to 222,895, while short non-commercial positions rose from 80,721 to 82,899. As a result, the total non-commercial net position slightly narrowed after rising to 140,006 from 140,222. The weekly closing price was 1.2132 against 1.2052 a week earlier, which indicates the presence of buyers in the market.
Trading is carried out slightly below 30 and 50 moving averages, which indicates the bears' attempt to take the market under their control.
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.
A breakout of the average border of the indicator in the 1.2200 area will lead to a new wave of growth for the euro. A breakout of the lower border of the indicator in the 1.2140 area 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.