The EUR/USD pair collapsed by 200 points on Thursday. At night it became known that the situation in Ukraine had seriously deteriorated. Moscow ordered an operation to "demilitarize and denazify", and all major cities were attacked from the air. Such a good reason forced traders to get rid of the most risky assets and currencies. The euro and the pound were also included in this list. At the same time, the British currency completely collapsed by 300 points. All of the previous day's macroeconomic data did not matter at all. No one even paid attention to them. All attention was again focused on geopolitics, and since the situation has seriously deteriorated, it is not surprising that traders pulled the pair out of the horizontal channel and weak volatility in which it spent the last week.
It is quite difficult to talk about trading signals at the end of Thursday. On the one hand, there was a strong downward movement, which it was a sin not to work out. On the other hand, it was very dangerous to trade in conditions of increased volatility and the strongest geopolitical background. It should be noted right away that only sell signals should have been considered yesterday, since the deterioration of geopolitics automatically meant an increase in demand for the world reserve currency. However, even among the sell signals with a very strong downward movement, there were false ones. The first sell signal was formed at the beginning of the European trading session and turned out to be false. After that, the price could not continue falling and returned to the area above the level of 1.1234. Therefore, a loss could be made here. The next sell signal turned out to be strong and after it the price went down 120 points, stopping only near the level of 1,1121. The profit should be taken around this level. As a result, it would be possible to earn about 100 points.
COT report:The new Commitment of Traders (COT) report, which was released on Friday, showed a new strengthening of the bullish mood among professional traders. This time, the "non-commercial" group closed about 7,000 contracts for short positions on the euro and opened 5,000 contracts for long positions. Thus, the net position increased by 12,000, which is clearly visible on the second indicator in the chart above. The total number of long positions exceeds the number of short positions by 50,000, so now we can really say that a new upward trend is beginning to form. It would be possible to say, if not for one "but". The European currency is not growing. It does not grow even at a time when there seem to be technical grounds for this. And they are quite simple: the pair has been falling for 14 months, so a correction is a fairly likely scenario. However, the fundamental background does not allow the euro to grow, so it is located very close to its annual lows. Actually, only 100 points away from them. Moreover, after the quotes fell to the level of 1.1180 at the end of November, traders failed to adjust the currency pair normally. The highest deviation from the lows was 360 points. Thus, we would say that now the data of COT reports do not coincide with the fundamental background and the technical picture that we see on a daily basis. And this is very strange, given the small influence of central banks on the money supply at this time.
We recommend to familiarize yourself with:Overview of the EUR/USD pair. February 25. The foreign exchange market has collapsed. And not just it. A war has started between Ukraine and Russia.
Overview of the GBP/USD pair. February 25. Boris Johnson calls on Europe to abandon Russian gas and oil.
Forecast and trading signals for GBP/USD on February 25. Detailed analysis of the movement of the pair and trading transactions.
EUR/USD 1HThe pair sharply fell on the hourly timeframe, but at the same time, this movement was preceded by a rebound from the trend line. Thus, from a technical point of view, a sell signal was received. However, of course, we understand that the only reason for such a powerful collapse is geopolitics. The fall has already stopped, but it may resume on Friday. We need to be prepared for any scenario - the markets are in shock right now. We allocate the following levels for trading on Friday – 1.0990, 1.1105, 1.1192, 1.1234, 1.1274, 1.1321, 1.1391, as well as the Senkou Span B (1.1387) and Kijun-sen (1.1248) 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. European Central Bank President Christine Lagarde will give a speech in the European Union on February 25, and data on personal incomes and expenses of Americans, as well as orders for durable goods, will be published in the United States. But it is unlikely that these events will arouse at least some interest in the market.
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.