FX.co ★ EUR/USD: plan for the US session on March 2 (analysis of morning trades)

To open long positions on EURUSD, you need to:

In my morning forecast, I recommended paying attention to the support level of 1.2003 and entering the market based on it. Let's look at the 5-minute chart and talk about where and how to buy the euro. After the release of an unexpectedly weak report on retail sales in Germany, the bears are trying to break below the level of 1.2003, however, nothing works out. Then there is a repeated test of this area, however, buyers quickly return the pair to this level, forming a false breakdown. The divergence on the MACD indicator (which I mentioned in my morning forecast) was another confirmation of the correct entry point into long positions. As a result, there is an upward movement to the resistance area of 1.2037, where it was possible to take profit.

And although there was a fairly good movement of the pair in the first half of the day, this did not affect the technical picture in any way. At the beginning of the US session, buyers will focus on the breakout and consolidation above the resistance of 1.2037, which they missed today in early trading. The test of this area from top to bottom forms an excellent signal for opening long positions in the euro with the aim of growth in the area of the maximum of 1.2093, where I recommend taking the profits. There are also moving averages that play on the side of sellers. The more distant target of the bulls will be the resistance of 1.2140. If in the second half of the day we do not see active actions on the part of buyers, and the speeches of representatives of the Federal Reserve System again lead to a decline in the euro, it is best to postpone long positions until the support test of 1.2003. I recommend opening long positions from this level only if a false breakout is formed. You can buy EUR/USD immediately for a rebound from the low of 1.1952, based on an upward correction of 20-25 points within the day. The next major support level is seen in the area of 1.1921.

To open short positions on EURUSD, you need to:

The bears tried to break below the level of 1.2003, however, it did not work out very well, which led to the pair's return to the resistance area of 1.2037. The main fight will unfold around this level at the beginning of the American session. However, it is possible to open new short positions today in the second half in the continuation of the downward trend only in the case of a false breakout in the resistance area of 1.2037. This scenario will be implemented in the case of the next statements from the Fed representatives on the topic of the growth of US bond yields. The nearest target, in this case, will be the minimum of 1.2003 - from the breakdown of which the further direction of the pair depends. A break of this level will lead to a larger decline in EUR/USD with an exit to the minimum of 1.1952, where I recommend taking the profits. If in the second half of the day we will continue to observe the upward trend, and the bears will not show any activity in the resistance area of 1.2037, then it is best to postpone short positions until the test of the area of 1.2093, where the moving averages are playing on the side of sellers. From there, you can sell EUR/USD immediately for a rebound to reduce by 20-25 points within the day. The next major resistance is seen around 1.2140.

Let me remind you that in the COT report (Commitment of Traders) for February 23, there were no special changes in the positions of large players, however, the growth of short positions shows how the advantage of buyers is beginning to melt. This time, it was not possible to quickly win back another major decline in the pair, which we have seen since the middle of last week. The sharp rise in bond yields in many developed countries is playing in the US dollar's favor, as investors expect the United States to be the first to start raising interest rates, which makes the US dollar more attractive. Buyers of risky assets should not rush to return to the market and it is better to wait for lower prices. A good plus for the euro will be the moment when European countries begin to actively curtail quarantine and isolation measures: Germany has already announced its plan in this direction, however, it has not yet come to the point. It is also necessary to wait for the moment when the service sector will start working again in full force, which will lead to an improvement in the economic prospects and also strengthen the EUR/USD pair. The COT report shows that long non-profit positions rose to the level of 228,501 from the level of 222,895, while short non-profit positions rose from the level of 82,899 to the level of 90,136. As a result, the total non-profit net position fell again for the second week in a row to 138,365 from 140,006. The weekly closing price was 1.2164 against 1.2132 a week earlier.

Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 daily moving averages, which indicates that the pressure on the pair remains.

Note: The period and prices of the moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger Bands

If the euro rises, the upper limit of the indicator in the area of 1.2065 will act as a resistance. A break of the lower limit of the indicator in the area of 1.2003 will lead to a new wave of decline in the euro.

Description of indicators

• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
• MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-profit speculative traders, such as individual traders, hedge funds, and large institutions that 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 position of non-commercial traders.
• Total non-commercial net position is the difference between the short and long positions of non-commercial traders.