To open long positions on EURUSD, you need to:
The pressure on the euro has increased today, as the European Central Bank failed to surprise investors yesterday. In my morning forecast, I paid attention to the support of 1.1933 and recommended deciding this level. Let's look at the 5-minute chart and talk about what happened. At the first test of the area of 1.1933, the bulls tried to return to the market, however, they did not show much zeal – as a result, the fall of the euro continued with greater force. In fairness, I must say that I missed the entry point to short positions since the normal reverse test of the level of 1.1933 did not occur. Most likely, the level was not quite correct: so if it was in the area of 1.1937, then everything would be completely different. We would have both a breakout and a reverse test of the level (I highlighted the entry point on the chart with a blue line).
In the afternoon, I slightly revised the plan of action. The task of buyers will be to regain control over the resistance of 1.1933, the breakout and test of which from top to bottom forms a good signal to open long positions. In this case, you can count on a larger increase in EUR/USD with a return to the maximum of this day in the area of 1.1989, where I recommend fixing the profit. If the bulls do not show much activity in the area of 1.1933 or the pressure on the euro will continue in the second half of the day – it is best to postpone purchases until the test of larger support of 1.1884, from which you can buy the euro immediately for a rebound in the expectation of an upward correction and 20-25 points inside the day. The next major level is seen in the area of 1.1838.
To open short positions on EURUSD, you need to:
As long as trading is below 1.1933, the pressure on the euro will continue, and good fundamental data on the US economy will only give confidence to the bears. The nearest goal in this scenario will be the support of 1.1884, where I recommend fixing the profit. The next major support is seen around 1.1838. With growth and the formation of a false breakout in the resistance area of 1.1933, a signal will also be formed to open short positions in the continuation of the downward trend. If the bears do not show activity in the area of 1.1933 or the US data will be worse than economists ' forecasts – it is best to postpone sales until the test of a larger resistance of 1.1989, from which you can sell the euro immediately for a rebound in the expectation of a downward correction of 25-30 points within the day.
Let me remind you that the COT report (Commitment of Traders) for March 2 clearly shows how there is a sharp reduction in long positions and a very large increase in short ones, which indicates a clear shift in the market towards sellers of risky assets. This is confirmed by the chart of the fall of the euro, which we are seeing for the third week. This time, it was not possible to quickly win back another major decline of the pair down. The sharp rise in bond yields of many developed countries continues, which plays in favor of the US dollar, as investors expect that the United States will be the first to start raising interest rates, which makes the US dollar more attractive.
The recent approval by the US Senate of a new aid package and a $ 1,400 payment to all Americans affected by the pandemic makes risky assets even less attractive. Therefore, it is better not to rush to buy euros but to wait for lower prices. A good plus for the euro will be the moment when European countries begin to actively curtail quarantine and isolation measures: Germany has already announced its plan in this direction, but it has not yet come to the point. It is also necessary to wait for the moment when the service sector will start working again in full force, which will lead to an improvement in the economic prospects and also strengthen the EUR/USD pair. The COT report shows that long non-profit positions declined to the level of 222,655 from the level of 228,501, while short non-profit positions increased from the level of 90,136 to the level of 96,667. As a result, the total non-profit net position declined again for the third week in a row to 125,988 from 138,365. The weekly closing price was 1.2048 against 1.2164 a week earlier.
Signals of indicators:
Moving averages
Trading is already below 30 and 50 daily moving averages, which indicates a return of pressure on the euro.
Note: The period and prices of the moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
Bollinger Bands
If the euro rises in the second half of the day, the average border of the indicator in the area of 1.1965 will act as a resistance.
Description of indicators
Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9Bollinger Bands (Bollinger Bands). Period 20Non-profit 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 the short and long positions of non-commercial traders.