EUR/USD 1H
The euro/dollar pair spent some time near the support area of 1.2032-1.2042 on the hourly timeframe on March 2. Thus, there were hopes that an unsuccessful attempt to overcome this area would provoke an upward movement. However, instead, the bears continued to put pressure on the pair, which led to an even greater decline for the quotes, to the extreme level of 1.2004. In fact, the psychological level of 1.2000 was reached, from which the rebound occurred. Thus, the upward correction against the movement, which lasted nonstop for three days, has nevertheless begun. Now it's aiming for the Kijun-sen and Senkou Span B lines of the Ichimoku indicator. A rebound from any of them can provoke the resumption of the downward movement. Although, as we have already discussed in the fundamental articles, there are now few compelling reasons for strengthening the dollar even further. Despite the fact that this currency has been depreciating for almost a year, there is no fundamental reason for forming a new downward trend now. Therefore, the upward movement is more likely to resume. In yesterday's article, we advised you to sell the pair if the price surpasses the 1.2032-1.2042 area. Such a signal was generated, but it brought no more than 10 points of profit, because an upward movement already began from the nearest target of 1.2004. You were advised to buy the pair when the price rebounds from the 1.2032-1.2042 area. As a result, a rebound did not occur from this area, however, the pair settled above this area, which can also be considered a buy signal. The targets are the two main lines of the Ichimoku indicator.
EUR/USD 15M
Both linear regression channels are pointing to the downside on the 15-minute timeframe. Thus, in the short term, the downward trend continues. The chart clearly shows that sellers could not overcome the area of 1.2032-1.2042 three times, there were no false breakouts of this area, but in the end they still settled below it. And in the afternoon, the bulls already managed to overcome this area, so now it is more preferable to move up, especially after the pair fell without recoil for three days, without any good reason.
Traders could only pay attention to the report on the consumer price index in the European Union. However, as is often the case in recent years, there was no special reaction to the macroeconomic statistics. To be more precise, there was no reaction at all. The euro continued to fall in price during the European trading session. Although formally, this can be considered a reaction, since the main indicator of inflation decreased from 1.4% y/y to 1.1% y/y. However, we are now inclined to believe that the movement of the last few days was not unambiguously associated with the US macroeconomic reports from last Friday. Most likely, a whole set of factors, including both technical and fundamental, played a role.
The European Union will publish the index of business activity in the service sector for February, which, according to analysts, may remain below the level of 50.0. Also, representatives of the European Central Bank Weidmann, Panetta and Schnabel will make speeches in the European Union. Meanwhile, the value of the ADP report on changes in the number of people employed in the private sector of the economy will also be announced in America on Wednesday. Recall that the market ignored all of the latest ADP reports, so there is no reason to assume that traders will work it out. Most likely, we will see a purely technical movement from the pair.
We have two trading ideas for March 3:
1) Bulls released the pair to level 20, and only around it did they realize and began to attack. Since the price settled above the area of 1.2032-1.2042, then buying the pair is relevant for this signal, and you can aim for the Senkou Span B (1.2101) and Kijun-sen (1.2116) lines. Take Profit in this case can be up to 50 points. When overcoming the Kijun-sen line, you should stay in long positions with targets at 1.2145 and 1.2190.
2) Bears held the initiative in the market for three days, but now it is time for a correction. So now you are advised to open short positions in case of a rebound from the Kijun-sen (1.2116) or Senkou Span B (1.2101) lines, while aiming for the support area of 1.2032-1.2042 and the support level of 1.2008. Take Profit in this case can be up to 90 points.
Forecast and trading signals for GBP/USD
COT report
The EUR/USD pair rose by 30 points during the last reporting week (February 16-22). In recent weeks, we have pushed for a continuation of the long-term upward trend. This is partly supported by the latest Commitment of Traders (COT) reports. Over the past two weeks, the mood of large traders has not significantly changed, and when the report was released, the number of open long positions among professional traders exceeded the number of open short positions three times. Thus, on the face of a bullish mood. The latest COT report did not show any major changes either. A group of non-commercial traders opened 6,500 Buy-contracts (longs) and Sell-contracts (shorts) during the reporting week. Thus, the net position of this group of traders did not change in any way, and the mood did not become more bullish or more bearish. However, for the third week in a row, the first indicator in the chart has signaled the unchanged sentiment of non-commercial traders (who, we recall, are the engine of the foreign exchange market). The green and red lines did not rise or fall during these three weeks. Thus, the major players took a wait-and-see attitude, as it were. But the days when the pair collapsed (Thursday and Friday of this week) were not included in the new COT report. Thus, since the beginning of September last year, major players have been aiming for a downward trend, but global fundamental factors prevent them from starting it. We have already mentioned global fundamental factors more than once, it all boils down to a huge increase in the money supply in the United States in 2020.
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.