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EUR/USD 5M analysis.
During the second trading day of the week, the EUR/USD pair was trading almost in a side channel. This is seen by the two linear regression channels, which are built automatically. They have a minimal upward slope. Tuesday's volatility was 71 points, which seems to be not a little, but not much either. There are no levels in the area where the price is now. Therefore, there were no trading signals on Tuesday. We believe that this is even for the best since many false signals could have been formed in flat conditions. Tuesday in general was extremely boring. The European Union published a report on GDP in the fourth quarter in the third estimate, but, as we warned yesterday, there was no reaction to it. GDP grew by 0.3% q/q, which is very little. Therefore, the European currency did not receive any support. There was no geopolitical news during the day either. Therefore, traders had absolutely nothing to react to.
As already mentioned, not a single trading signal was formed on Tuesday. We believe that today the picture may repeat itself since there will be no important data today. Negotiations between Sergey Lavrov and Dmytro Kuleba are scheduled for March 10. The report on US inflation will be released on March 10. The ECB meeting will be held on March 10. Thus, the market can now take a wait-and-see position and just wait for the key Thursday, so as not to risk unnecessarily and in advance.
COT Report:
The new COT report, which was released on Friday, showed a new strengthening of the "bullish" mood among professional traders. This time, the Non-commercial group has opened about 16 thousand contracts for purchase and 6.8 thousand contracts for sale. Thus, the net position increased by another 9 thousand, which is visible on the second indicator in the illustration above. The total number of purchase contracts exceeds the number of sale contracts by 70 thousand, so now we can say that a new upward trend is beginning to form. The only problem is that the euro continues to fall, and not grow. And this is an absolute divergence. What are we observing now? We observe that the demand among major players for the euro currency is growing, but at the same time, the euro currency itself is falling. What does this mean? This means that the demand for the US currency is growing at a much higher rate. After all, COT reports reflect exactly the demand for the euro currency, not taking into account the dollar. And the dollar is now used by the whole world as a reserve currency. In a difficult geopolitical situation, the demand for the dollar is only growing, which is why we are seeing such a picture. Based on this, we can conclude that now COT reports cannot be considered to predict the further movement of the euro/dollar pair. These reports simply do not coincide with what is happening in the market itself. Therefore, we need to wait for the resolution of the geopolitical conflict in Eastern Europe.
EUR/USD 1H analysis.
On the hourly timeframe, the downward trend persists, as evidenced by the downward trend line. The price is very far from it and has not made any attempts to adjust to it yet. Today will be a boring day in terms of news, so the market is most likely already waiting for March 10. On Wednesday, we allocate the following levels for trading - 1.0729, 1.0767, 1.0990, 1.1057, 1.1144, as well as the Senkou Span B (1.1224) and Kijun-sen (1.0975) lines. There are also auxiliary support and resistance levels, but no signals will be formed near them. The lines of the Ichimoku indicator may change their position during the day, which should be taken into account when searching for trading signals. Signals can be "bounces" and "overcoming" levels-extremes and lines. Do not forget about placing a Stop Loss order at breakeven if the price went in the right direction of 15 points. This will protect against possible losses if the signal turns out to be false. On March 9, no important reports or other events are scheduled in the European Union and the United States. Therefore, the fundamental and macroeconomic backgrounds will be absent. Most likely, the geopolitical background will also be weak, as the parties are presumably waiting for a meeting between Lavrov and Kuleba on March 10 in Turkey. Nevertheless, a military conflict is an unpredictable thing, there may be surprises.
Explanations to the illustrations:
Price levels of support and resistance (resistance /support) - thick red lines, near which the movement may end. They are not sources of trading signals.
Kijun-sen and Senkou Span B lines - the lines of the Ichimoku indicator, transferred to the hourly timeframe from the 4-hour one. Are strong lines.
Extreme levels - thin red lines from which the price bounced earlier. They are sources of trading signals.
Yellow lines - trend lines, trend channels, and any other technical patterns.
Indicator 1 on the COT charts - the net position size of each category of traders.
Indicator 2 on the COT charts - the net position size for the "Non-commercial" group.
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