EUR/USD 5M analysis.
During the last trading day of the week, the EUR/USD pair was trading trendily again. Most of the day, there was a drop in the quotes of the European currency, which does not surprise anyone at all. However, if earlier last week the dollar was growing mainly due to the complex geopolitical background in Eastern Europe, then on Friday the macroeconomic background was added to the geopolitics, which supports the dollar. The NonFarm Payrolls report is rightfully considered one of the most important, so it is not surprising that traders reacted to it in the form of new purchases of American currency. In addition, the unemployment rate undoubtedly pleased traders, as it fell to 3.8%. In addition to everything, the dollar was growing most of the day without macroeconomics. Thus, almost all factors helped the dollar to strengthen on Friday. In total, it grew by 140 points.
As for trading signals, only one was generated during the day. At the very end of the European trading session, the price overcame the level of 1.0990, which served as a signal to sell the pair. It was very far from the nearest target level, so the deal should have been closed manually in the late afternoon. In any case, wherever you closed the deal, you would still make a profit. It was possible to count on 60-70 points.
COT Report:
The new COT report, which was released on Friday, showed a new strengthening of the "bullish" mood among professional traders. This time, the Non-commercial group has opened about 16 thousand contracts for purchase and 6.8 thousand contracts for sale. Thus, the net position increased by another 9 thousand, which is visible on the second indicator in the illustration above. The total number of purchase contracts exceeds the number of sale contracts by 70 thousand, so now we can say that a new upward trend is beginning to form. The only problem is that the euro continues to fall, and not grow. And this is an absolute divergence. What are we observing now? We observe that the demand among major players for the euro currency is growing, but at the same time, the euro currency itself is falling. What does this mean? This means that the demand for the US currency is growing at a much higher rate. After all, COT reports reflect exactly the demand for the euro currency, not taking into account the dollar. And the dollar is now used by the whole world as a reserve currency. In a difficult geopolitical situation, the demand for the dollar is only growing, which is why we are seeing such a picture. Based on this, we can conclude that now COT reports cannot be considered to predict the further movement of the euro/dollar pair. These reports simply do not coincide with what is happening in the market itself. Therefore, we need to wait for the resolution of the geopolitical conflict in Eastern Europe.
EUR/USD 1H analysis.
On an hourly timeframe, the downward trend is visible to the naked eye, even without a corresponding trend line. Thus, the price may continue to fall in the coming days. Since the beginning of the war in Ukraine, the price has not even approached the trend line. This suggests that the bears' positions are extremely strong now, and the bulls do not even have enough strength to correct. However, there should still be corrections on Monday – this is a good opportunity to move up a little. On Monday, we allocate the following levels for trading – 1.0729, 1.0767, 1.0990, 1.1057, 1.1144, 1.1234, 1.1274, as well as the Senkou Span B (1.1251) and Kijun-sen (1.1066) lines. There are also auxiliary 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 "overcoming" 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 against possible losses if the signal turns out to be false. On March 7, not a single important or even interesting event is planned in the European Union and the States. Thus, traders will have nothing to react to, except for the geopolitical background. It is today that the third round of negotiations between Russia and Ukraine will take place, but we do not particularly expect strong progress. Many experts believe that these are "formal" negotiations since the positions of the parties differ radically from each other. The deterioration of the geopolitical situation may lead to a new fall in the euro and a rise in the dollar.
Explanations to the illustrations:
Price levels of support and resistance (resistance/support) - thick red lines, near which the movement may end. They are not sources of trading signals.
Kijun-sen and Senkou Span B lines - the lines of the Ichimoku indicator, transferred to the hourly timeframe from the 4-hour one. Are strong lines.
Extreme levels - thin red lines from which the price bounced earlier. They are sources of trading signals.
Yellow lines - trend lines, trend channels, and any other technical patterns.
Indicator 1 on the COT charts - the net position size of each category of traders.
Indicator 2 on the COT charts - the net position size for the "Non-commercial" group.