EUR/USD 5M
The EUR/USD pair's quotes continued to fall last Friday, which began after a strong growth on Thursday. Since the ascending trend line has been overcome, the trend is currently descending. The pair has also settled below the critical line, so it can continue moving towards the Senkou Span B. In general, as we said earlier, the euro has no reason to grow against the US dollar now. Even the growth that happened the week before last, we consider absolutely illogical, from a fundamental point of view. It can only be justified by the technical need of the pair to adjust a bit. Thus, based on these considerations, we believe that at this time the US currency has a much better chance of growth than the euro. Moreover, traders now do not always logically react to macroeconomic statistics and the fundamental background. For example, on Friday, a much lower consumer sentiment index from the University of Michigan caused the dollar to rise, not fall.
As for trading signals, on Friday they were as weak and inaccurate as possible. To begin with, the pair was in a weak upward movement, that is, in correction, for most of the European and US trading sessions. Therefore, it was very difficult to expect strong signals in principle. And only a 60-point decline in the last 3-4 hours turned a boring day into a rather interesting one. By the way, this fall is still very difficult to explain. And in any case, we should not have tried to work out this decline, since the sell signal was formed too late. As for the first buy signal, which was formed within a few hours, it cannot be called strong, and in the end it turned out to be false. After its formation, the price managed to go up no more than 13 points, which was not enough even to set a Stop Loss to breakeven...
COT report
The new Commitment of Traders (COT) report, which was released on Friday, did not show any major changes, and its data does not reflect what is happening in the foreign exchange market at all. In short, professional players continued to increase long positions during the reporting week, as well as get rid of short positions. In total, the net position of the non-commercial group increased by 11,000. So now we have a picture in which major players have been buying the euro currency for several consecutive weeks, and their mood is clearly bullish. The new COT report shows the behavior of traders a week earlier (it comes out with a 3-day delay). And last week, the euro was growing steadily. However, look at the chart above: is the current technical picture similar to the beginning of an upward trend? After all, even last week the price updated its annual lows! Thus, formally, it can be concluded that the major players are already looking towards long positions on the euro currency, but in practice this mood is so unstable that at any moment it can result in a new fall of the euro/dollar pair. The main factor that should be taken into account now is the lack of growth factors in the euro. And if we add to this the tense geopolitical situation that developed at the beginning of the new year, then it is the dollar that has additional growth factors. And there were plenty of them even without geopolitics. Thus, as before, there is a high probability of dollar growth.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. February 14. "The music didn't play for long" for the European currency.
Overview of the GBP/USD pair. February 14. Boris Johnson's political career depends on Scotland Yard.
Forecast and trading signals for GBP/USD on February 14. Detailed analysis of the movement of the pair and trading transactions.
EUR/USD 1H
The euro/dollar pair has started a strong fall on the hourly timeframe, which may take a long time. The nearest target is the Senkou Span B line and, if the bears manage to overcome it, the euro currency will resume the downward trend of 2021, which is perfectly visible on the 24-hour timeframe. The fundamental background does not provide any support to the euro currency right now. On Monday, we allocate the following levels for trading – 1.1234, 1.1274, 1.1375, 1.1482, 1.1507, 1.1534, as well as the Senkou Span B (1.1302) and Kijun-sen (1.1412) lines. There are also support and resistance levels, but no signals will be formed near them. The lines of the Ichimoku indicator may change their position during the day, which should be taken into account when searching for trading signals. Signals can be "bounces" and "breakthrough" levels - extremes and lines. Do not forget about placing a Stop Loss order at breakeven if the price went in the right direction of 15 points. This will protect you against possible losses if the signal turns out to be false. No important report or event planned in the European Union and the United States. European Central Bank President Christine Lagarde's speech is due to take place, but it is unlikely for her to share fundamentally new information with the market. Nevertheless, due to the tension in geopolitics, there may be movements during the day.
Explanations for the chart:
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.