FX.co ★ Forecast and trading signals for EUR/USD on February 9. COT report. Analysis of Monday. Recommendations for Tuesday

EUR/USD 1H

The euro/dollar pair continued to correct on the hourly timeframe on Monday, February 8, following the upward movement that started on Friday. Recall that back then the upward movement began in the morning, and we concluded that this is a purely technical upward movement, caused exclusively by technical factors. Of course, there were also weak reports from overseas, however, from our point of view, it did not cause the dollar to fall. Moreover, the Nonfarm payrolls report was not so bad as many believe. Thus, the pair corrected to the extreme level of 1.2058 yesterday, from which the price had rebounded twice from above. This time it rebounded from the bottom and this rebound is a strong enough signal to sell. In order to make sure of the bearish desires of traders, you can also wait for the Kijun-sen critical line to be crossed. However, if our assumption about the corrective nature of the entire downward movement of the pair in 2020 is correct, then in the near future it may end and the global upward trend will resume with renewed 2.5-year highs. So far, the descending trend line remains in force, from which one should build on when determining the current trend.

EUR/USD 15M

The higher linear regression channel is directed to the upside on the 15-minute timeframe, while the lower one turned sideways. Since the price has yet to surpass the 1.2058 level, the downward movement is likely to resume. Therefore, both linear regression channels can start moving down. The lower timeframe also specifies that there was no false breakout of the 1.2058 level.

COT report

The EUR/USD pair fell by 80 points during the last reporting week (January 26 - February 1). Therefore, we can expect professional traders to slightly reduce their demand for the euro, since the dollar has been rising for four consecutive weeks. However, the new Commitment of Traders (COT) report was a real surprise, which needs to fit into the overall picture of things for the euro/dollar pair. During the reporting week, the most important group of non-commercial traders opened almost 11,000 sell contracts (shorts) and closed (!!!) 23,000 buy contracts (longs). Considering that we concluded that the upward trend is likely to continue, this behavior of major players does not fit with it at all. However, as we have already said, any assumption or hypothesis must be confirmed by technical factors and signals. Therefore, for now, these are just numbers. Figures indicate a 34,000 decline in the net position of non-commercial traders. This means that they have significantly become more bearish. But does this mean that the euro will continue to fall? Is demand falling in parallel for the US dollar, which is not included in the COT reports? We believe that this is exactly the case when the report data needs to be compared with the technical picture. For example, a rebound has occurred on the 24-hour timeframe from the Senkou Span B line and the 50.0% Fibonacci level. Thus, there are high chances of growth for the pair, and the COT report contradicts this, so we do not take it into account for now. But if the Senkou Span B line is crossed, then the data of the technique and the COT reports will coincide and a new long-term downward trend can be expected.

No major US reports on Monday, February 8. European Central Bank President Christine Lagarde spoke, but she did not mention anything that was particularly considered as new. Recall that Lagarde's latest statements were far from the most optimistic for the European economy. She noted that epidemiological risks remain, the economic recovery fund has not yet been formed, and the economy will begin to recover closer to mid-2021. Lagarde also noted that the eurozone economy is unlikely to return to pre-crisis levels before mid-2022. Thus, it certainly does not provide any support to the euro. However, traders continue to ignore her words.

No important macroeconomic or fundamental event planned on Tuesday, February 9. There are also few global fundamental themes now. We continue to insist that the dollar may start a long-term decline when Congress finally announces its final approval on the new stimulus package for the US economy, but so far we have yet to receive such confirmation, which means that the greenback may still make several attempts to strengthen against the euro.

We have two trading ideas for February 9:

1) Buyers still do not have the initiative as the price continues to be below the downward trend line. Thus, we recommend buying the pair if the price settles above the downtrend line with targets at the resistance levels of 1.2139 and 1.2158. Take Profit in these cases can be up to 50 points. However, there are no prerequisites for changing the trend right now.

2) Bears continue to hold the initiative in their hands, but in recent days they have been feeling bad. But for now we continue to recommend trading bearish while aiming for the support level of 1.1955, if the price settles below the Kijun-sen line (1.2012). Take Profit in this case can be up to 50 points. Also, short positions could (will) be opened with a clear rebound from the 1.2058 level or a trend line with the same goals.

Forecast and trading signals for GBP/USD

Explanations for illustrations:

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.