EUR/USD 5M
The EUR/USD pair traded quite interestingly on March 11, maintaining an upward trend. The dollar continued to fall in price during the day, while the euro depended on the ECB meeting and its results. However, we can immediately say that in practice, traders showed a very modest reaction to a very important fundamental event. On the other hand, the European Central Bank did not make any important decisions and, by and large, left everything as it is. But first things first. Night trades, as usual, were very boring - in flat. The bulls were active during the European session, in line with the general upward trend. Since the price settled above the Kijun-sen line, this could be regarded as a buy signal, especially since both linear regression channels were directed to the upside. However, this signal did not bring a large amount of profit to traders, since after the initial impulse buyers decided not to force events and wait for the results of the ECB meeting. Although there were no results, since the ECB left all the parameters of monetary policy unchanged, noting only that it intends to buy assets under the PEPP program more quickly than at the beginning of 2021, nevertheless, once these reports were released, the markets began to get nervous. And so the pair was tossed from side to side. The numbers 1 and 2 in the chart mark the time points when these results were published and is also when ECB President Christine Lagarde's press conference started. As a result, in general, the euro slightly fell, but not for long, since during the test of the critical line, the bears realized their weakness, as well as the fact that the ECB and Lagarde did not report anything negative and the upward movement was resumed. Thus, traders could reopen long positions from the critical line within the general trend. After that, the price went up by about 30 points. It was possible to take profits at the end of the trading day, you can wait for the nearest target level of 1.2004 to be worked out by setting Stop Loss to zero.
EUR/USD 1H
On the hourly timeframe, we can see that the downward trend line is no longer relevant, since the price has settled above it, and an upward trend line has formed instead, which confirms that a new upward trend is starting to form. Buyers are still moving the pair towards the Senkou Span B line, which is now their goal and benchmark. In our fundamental articles, we have repeatedly said that globally we expect the upward trend to resume. Therefore, the bulls should show whether they are ready for such a scenario near the Senkou Span B line, or the pair will remain within the framework of the global correction for some time. Only minor reports will be published on Friday. The European Union will release a report on industrial production, and in the United States - the producer price index and consumer sentiment index from the University of Michigan. We believe that the reaction to these will be weak and visible only on the 5-minute timeframe. In general, they can affect the overall trend only if their actual values are in strong contrast to the predicted ones. Thus, you should be cautious once these reports are finally released. In general, you are advised to continue trading from important levels and lines that are plotted on the hourly timeframe. Do not forget about setting Stop Loss to breakeven if the price moves 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.