In my morning forecast, I paid attention to the 1.0783 level and planned to make decisions on entering the market from it. Let's look at the 5-minute chart and figure out what happened. Growth occurred, but it never came to a false breakdown. Due to the low volatility of the market, trading remained within the channel. Considering that none of the levels have been tested, there is no point in changing anything. In the afternoon, the technical picture was not revised.
To open long positions on EURUSD, you need:
Important data on the producer price index, consumer sentiment index and inflation expectations from the University of Michigan are ahead. But if this is not enough, then you can always refer to a number of data related to the real estate market. Statistics on the volume of construction permits issued and the number of new foundations laid are also very important for determining the economic state of the country. But if that's not enough, you can always end the day by listening to interviews with FOMC members Michael S. Barr and Mary Daly. It is difficult to say how the dollar will react to all this, but if there is little positive in all this, most likely, the euro will continue to recover at the end of the week.
I plan to act according to the morning strategy: a decline and the formation of a false breakout near the nearest support at 1.0756, where the moving averages are also situated, will be suitable for buying, counting on an upward correction towards 1.0783. Breaking and updating this range from top to bottom will provide an opportunity to buy with a surge to 1.0805. The ultimate target will be the maximum at 1.0837, where I will take profit. In the case of a decline in EUR/USD and the absence of activity at 1.0756 in the second half of the day after strong real estate and inflation market statistics, pressure on the pair will increase, returning the market to the sellers' side. In this case, I will only enter after a false breakout in the area of 1.0727. I plan to open long positions immediately on the rebound from 1.0698, with a target of an upward correction within the day by 30-35 points.
To open short positions on EUR/USD, the following is required:
Protecting the nearest resistance at 1.0783 is the main task for sellers for the second half of the day. Forming a false breakout there and a firm stance by US policymakers will put pressure on the pair, opening the way to the area of 1.0756, where the moving averages are located. Breaking and securing below this range and a reverse test from bottom to top will provide another selling point with a sharp decline in the pair to around 1.0727, returning the bearish trend. The ultimate target will be the minimum at 1.0698, where I will take profit. In the case of an upward movement of EUR/USD in the second half of the day, which is more likely, and the absence of bears at 1.0783, buyers will have a chance for further recovery of the pair. In this case, I will postpone sales until testing the next resistance at 1.0805. I will sell there as well, but only after an unsuccessful consolidation. I plan to open short positions immediately on the rebound from 1.0837 with a target of a downward correction by 30-35 points.
The COT (Commitment of Traders) report for February 6 showed an increase in both long and short positions. Obviously, after the meetings of the Federal Reserve and the European Central Bank, there are now many more euro sellers, as everyone understands that no one will change anything yet. But if last week was quite calm, important inflation data in the USA, capable of changing a lot in the market, await us soon. Another surge in price pressure will strengthen the dollar's positions and a sharp sell-off of the European currency, which is belatedly demonstrated to us by an increase in short positions on the euro. The COT report indicates that long non-commercial positions increased by 2,090 to 202,450, while short non-commercial positions increased by 28,708 to 140,297. As a result, the spread between long and short positions increased by 947.
Indicator signals:
Moving averages
Trading is carried out above the 30 and 50-day moving averages, indicating the likelihood of the euro's rise.
Note: The author considers the period and prices of moving averages on the hourly chart (H1) and differs from the general definition of classical daily moving averages on the daily chart (D1).
Bollinger Bands
In case of a decline, the lower boundary of the indicator, around 1.0756, will act as support.
Description of indicators:
Moving Average (MA) is a trend indicator that shows the current trend by smoothing volatility and noise. Period - 50. Marked on the chart in yellow.Moving Average (MA) is a trend indicator that shows the current trend by smoothing volatility and noise. Period - 30. Marked on the chart in green.MACD (Moving Average Convergence/Divergence) Indicator. Fast EMA - 12 period. Slow EMA - 26 period. SMA - 9 period.Bollinger Bands. Period - 20.Non-commercial traders are speculators, such as individual traders, hedge funds, and large institutions, who 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 positions of non-commercial traders.The total non-commercial net position is the difference between non-commercial traders' short and long positions.