FX.co ★ Forecast and trading signals for EUR/USD on February 12. COT report. Analysis of Thursday. Recommendations for Friday

EUR/USD 1H

The euro/dollar pair continued to trade between the levels of 1.2111 and 1.2139 on the hourly timeframe on February 11. This movement began yesterday after the price failed to overcome the resistance level of 1.2139 in two attempts. It could not even do this today. However, despite three rebounds from the 1.2139 level, the downward correction has not started. That is, the pair spent two days in a range of 40 points wide, no more. Thus, a flat was formed for the pair. Therefore, while the pair is in this horizontal channel, it is not recommended to reject it. Flats are also different. Sometimes we recommend trading between the borders of the horizontal channel, but this is in cases where the channel is at least 100 points wide. We have a flat + weak volatility. In the previous review, we advised you to trade bullish when the price surpasses the 1.2139 level. However, this did not happen over the past day. We recommended selling the pair when the price has settled below the critical Kijun-sen line. However, this signal was not generated either. Therefore, one should not have opened positions following our trading recommendations.

EUR/USD 15M

Both linear regression channels are directed to the upside on the 15-minute timeframe, but their slope angle is such that the movement is more suited to the concept of a flat than a trend. You can clearly see that the pair has surpassed the 1.2139 level several times and this is a false breakout. Traders could open long positions on this signal, however, they would receive a loss of about 10-12 points, since the upward movement did not continue.

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.

The European Commission published revised economic forecasts for 2021 and 2022. However, looking ahead, traders did not pay attention. However, take note that forecasts for GDP for the current year were reduced to +3.8%, and for 2022 - increased to +3.8%. Inflation is not expected to exceed 1.4% y/y over the next two years. Thus, according to these data, the European Central Bank will have no reason to tighten monetary policy over the next two years.

The European Union is set to publish a report on industrial production for December, while the US will release the consumer sentiment index from the University of Michigan. Both of these reports are frankly secondary. Traders still do not react to macroeconomics, so this data will definitely be ignored. Of the burning topics now, only the topic of approving a new stimulus package for the American economy remains. Interesting - the Senate meeting on the impeachment of Donald Trump.

We have two trading ideas for February 12:

1) Buyers continue to hold the market in their hands, but cannot overcome the 1.2139 level. Thus, we recommend buying the pair if the price settles above the 1.2139 level and you can aim for 1.2158 and 1.2190. Take Profit in these cases can be up to 50 points. However, also take note of the low volatility and flat, in which the pair has been trading during the last days. You can also open longs when the price bounces off the Senkou Span B line with targets at 1.2111 and 1.2139.

2) Bears were unable to resume the pair's downward movement. Therefore, short positions have lost their relevance at the moment. We recommend trading bearish again if the price breaks the Kijun-sen line with 1.2004 and 1.1955 as the initial targets. Take Profit in this case can be up to 75 points. You can also sell the pair in small lots if the price settles below the 1.2111 level. The probability of a downward correction is now growing.

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.