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EUR/USD 1H
The euro/dollar pair began a downward movement and settled below the rising channel on the hourly timeframe on February 24. Thus, the trend has changed to a downward trend, but, nevertheless, the bulls can still retain the initiative if they keep the pair above the critical line. At the moment, we can say that a rebound has occurred from this line. Therefore, the upward movement can resume. Thus, the bears have not done anything out of the ordinary yet, and the US dollar remains very weak, despite the general strengthening in 2021. In our last review, we recommended trading down if the price settles below the rising channel with the target of the Kijun-sen line. Subsequently, the Kijun-sen line slightly increased from 1.2101 to 1.2108. The price eventually came to this level after it surpassed the rising channel. Thus, it was possible to earn about 20 points on this signal. We advised you to open long positions in the event of a price rebound from the Kijun-sen line or from the lower line of the rising channel. The first buy signal was formed, so at the moment traders can be in long positions. In general, we would say that the dollar may start a long decline in the coming weeks. We examined the reasons in detail in the fundamental articles.
EUR/USD 15M
Both linear regression channels turned sideways on the 15-minute timeframe. Thus, in the most short term, the upward trend is questioned. However, the bears could not pull the pair away from the area below the critical line. One can clearly see a rebound from the Kijun-sen line and the fact that the price spent no more than half an hour below this line.
COT report
The EUR/USD pair rose by 70 points during the last reporting week (February 9-15). Volatility during this period of time was practically minimal. In the chart above, you can see that the pair, in principle, has not significantly decreased over the past weeks. We are constantly talking about a corrective January, but if you look at the chart, it becomes clear that this correction, compared to the entire 11-month upward trend, is simply nothing. A banal rollback. Thus, in general, we can conclude that market participants still do not favor the dollar and do not believe in it. Furthermore, the Commitment of Traders (COT) report from two weeks ago recorded a sharp drop in the number of Buy-contracts (longs) for the "non-commercial" group of traders. Then the net position of non-commercial traders dropped 33,000 contracts at once. It seems to be a good start for a downward trend, but the following week the COT report recorded an increase in the net position of major players, and the latest report that was released this Friday showed changes, albeit minimal, in favor of the bulls. That is, professional traders have taken up buying the euro once again. Around 2,500 new buy contracts were opened, as well as 1,300 Sell-contracts (shorts). The changes, respectively, are minimal and do not greatly affect the overall picture of the state of affairs. Thus, the overall picture remains in favor of the bulls, as more than 220,000 buy contracts and only 84,000 sell contracts remain open. The indicators below the chart clearly show that the trend is no longer becoming bearish. The green and red lines of the first indicator reflecting the net positions of the groups of traders "non-commercial" and "commercial" do not converge, therefore the current trend remains in effect.
No macroeconomic report from the European Union and no fundamental event either. Meanwhile, Federal Reserve Chairman Jerome Powell's speech took place in the US Congress yesterday, which completely repeated the first. Traders have already been aware of all the main theses of the speech. Powell did not provide any signals regarding the possibility of any changes in the economy or monetary policy in the near future. Therefore, in fact, there was nothing to react to.
The European Union is set to publish a report on changes in the money supply M3. And this report has recently become very important for traders. Recall that according to our latest research, the main reason for the 11-month fall of the dollar lies precisely in the huge increase in the money supply in the United States, while in the European Union its increase was small. However, today the report on the M3 unit is unlikely to witness major changes. Therefore, we advise you to pay attention to the upcoming US reports, this includes a report on GDP, a report on orders for durable goods, a report on applications for unemployment benefits.
We have two trading ideas for February 25:
1) Bulls continue to keep the initiative in their hands, even though the quotes have left the rising channel. Thus, we recommend opening new long positions with targets at the levels of 1.2145 and 1.2183 if the price rebounds from the Kijun-sen line (1.2120). Take Profit in this case can be up to 50 points, which is not so bad considering the current volatility values.
2) Bears have taken the first step towards a new downward trend, but will they be strong enough to build on their success? Thus, you can open short positions if the price settles below the Kijun-sen line (1.2120) with the targets of the Senkou Span B line (1.2094) and the support level of 1.2037. Take Profit in this case can be up to 70 points. If the profit on the deal is 40-50 points, then it can be consolidated, since the volatility is not too high now.
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.
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