To open long positions on EURUSD, you need:
In my morning forecast, I paid attention to several levels of support and resistance and recommended them to make decisions on entering the market. Let's look at the 5-minute chart and figure out what happened. The actions of Russian troops on the territory of Ukraine continue to put serious pressure on the euro. A false breakdown at the level of 1.1224 in the first half of the day led to the formation of a buy signal, which resulted in an increase in EUR/USD to the resistance area of 1.1256, allowing about 30 points to be taken from the market. However, the inability to offer anything above 1.1256 led to the pair's return to this level and to the formation of a signal to open short positions. At the time of writing, the pair had already gone down more than 40 points and the pressure only continued to increase. And what were the entry points for the pound this morning?
In the afternoon, several important fundamental statistics on the American economy are coming out, but it is unlikely that it will be of serious importance now, especially in the conditions of what is happening in the world political arena. The market will continue to react only to geopolitical changes and news related to Russia and Ukraine. If there is no negative, you can count on reducing the pressure on the pair. In the case of serious responses to Russia's actions by the US and the EU, the fall in risky assets may continue further. An important task of the bulls for the second half of the day will be to protect the nearest support of 1.1191. Only the formation of a false breakdown will give the first entry point into long positions in the expectation of a slight correction of the pair by analogy with the one we observed this morning from the level of 1.1224. It is possible to count on a larger recovery of EUR/USD only after active actions of buyers in the area of 1.1256, which could not be broken above in the first half of the day. A breakout and a test of this range from top to bottom will lead to a buy signal and open up the possibility of recovery to the area of 1.1285, where the moving averages are located, playing on the sellers' side. I recommend fixing profits there. However, as noted above, geopolitical tensions will affect the euro. With the further aggravation of the Russia-Ukraine conflict, the demand for the US dollar will only increase. If the pair declines during the American session and there is no activity at 1.1191, traders will begin to close long positions, which will only increase the pressure on the pair. Therefore, it is best to postpone purchases until a false breakdown at 1.1154, but it is possible to gain long positions on the euro immediately for a rebound from the level of 1.1213, or even lower - around 1.1070 with the aim of an upward correction of 20-25 points within a day.
To open short positions on EURUSD, you need:
Sellers keep the market under full control. Today's data on the change in GDP for the 4th quarter of last year, as well as the report on the number of initial applications for unemployment benefits, can only strengthen the dollar's position. Until the moment when trading is conducted below 1.1224, we can count on the continuation of the pair's fall. The important task of the bears in the afternoon will be the protection of this resistance. The formation of a false breakdown at this level by analogy with what I discussed above, as well as negative news related to Russia and Ukraine - all this will be a signal to open short positions to reduce EUR/USD to the area of 1.1191. A breakdown of this area and a reverse test from the bottom up will give an additional signal to open short positions already with the prospect of falling to a minimum of 1.1154, and there you can reach 1.1113, where I recommend fixing profits. The statements of FOMC members Rafael Bostic and Loretta Mester on the topic of interest rates may slightly reduce the appetite for the US dollar, which will lead to the closure of short positions and correction of the pair, so pay attention to this. If the euro rises during the American session and there are no bears at 1.1224, it is best not to rush with sales. The optimal scenario will be short positions when forming a false breakdown in the area of 1.1256. You can sell EUR/USD immediately for a rebound from 1.1285, or even higher - around 1.1315 with the aim of a downward correction of 15-20 points.
The COT report (Commitment of Traders) for February 15 recorded a reduction in both long and short positions, which led to an increase in the positive delta, as there were much fewer short positions. The uncertain policy of the European Central Bank, together with its president Christine Lagarde, who recently said that it was necessary to act more aggressively in the event of an acceleration of inflationary pressure, and last week completely changed her position, leads traders to a dead end. But even despite the growth of the positive delta, the euro sank very much at the end of the reporting period. This is happening against the background of the risk of a military conflict between Russia and Ukraine. More recently, the Russian authorities recognized the independence of the LDPR, which only exacerbated geopolitical tensions around the world. Another weighty argument for the observed downward movement of the EUR/USD pair is the actions of the Federal Reserve System in relation to interest rates. According to the Fed minutes from the February meeting, it is expected that the central bank may resort to more aggressive actions and raise rates immediately by 0.5% in March this year, and not by 0.25%, as originally planned. This is a kind of bullish signal for the US dollar. The COT report indicates that long non-commercial positions decreased very slightly from the level of 218,973 to the level of 217,899, while short non-commercial positions decreased from the level of 180,131 to the level of 170,318. This suggests that although fewer people are willing to sell euros, there are no more buyers from this. It seems that traders prefer to sit on the sidelines of those events that are now rapidly gaining momentum. At the end of the week, the total non-commercial net position increased slightly and amounted to 47,581 against 38,842. The weekly closing price collapsed and amounted to 1.1305 against 1.1441 a week earlier.
Signals of indicators:
Moving averages
Trading is below 30 and 50 daily moving averages, which indicates a bear market.
Note: The period and prices of 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
In the case of growth, the average border of the indicator in the area of 1.1285 will act as resistance.
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.
