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To open long positions on EURUSD, you need:
In my morning forecast, I paid attention to the 1.1340 level and recommended making decisions on entering the market from it. Let's look at the 5-minute chart and figure out what happened. Considering that no people were willing to buy the US dollar after yesterday's extraordinary meeting of the Fed, and let me remind you that no changes were made in interest rates - euro buyers did not miss the moment and, taking advantage of good statistics on Germany, returned the pair to the 1.1340 area. The formation of a false breakdown there led to a sell signal, but I did not wait for a major downward movement. Sometime later, a breakdown and a test of this level took place from top to bottom, which led to the formation of a signal to buy the euro - valid at the time of writing. In the afternoon, the technical picture changed. And what were the entry points for the pound this morning?
During the American session, we are waiting for the next data on inflation in the United States, which may tip the scales on the side of dollar buyers. But given the fact that the data are released at producer prices, and there is a very serious spread of indicators due to the crisis in the energy market, it is unlikely that even the most serious changes will be able to affect the attitude of the Federal Reserve System to the issue of monetary policy. The most optimal scenario for buying the euro in the afternoon will be the formation of a false breakdown in the support area of 1.1325, just below which the moving averages are playing on the side of the bulls. An equally important task of the bulls during the American session is to control the new level of 1.1366, to which the pair is now gradually approaching. A breakthrough of 1.1366, as well as a top-down test together with weak data on the Empire Manufacturing manufacturing index - all this will lead to an additional signal to buy the euro and open up the possibility of recovery to the area of 1.1406. A breakdown and a test of this level from top to bottom will open a direct road to 1.1452 and 1.1491, where I recommend fixing the profits. If the pair declines during the American session and there is no activity at 1.1325, most likely the bulls will begin to experience serious problems since the inability to catch on to 1.1325 can seriously affect the new upward correction movement of the euro. In this case, it is best to postpone purchases until 1.1283. However, I advise you to open long positions there when forming a false breakdown. You can buy the euro immediately for a rebound against the bear market from the level of 1.1235, or even lower - around 1.1200 with the aim of an upward correction of 20-25 points within the day.
To open short positions on EURUSD, you need:
Sellers are not in a hurry to return to the market yet, especially after the data indicating an improvement in the index of sentiment in the German business environment. It is unlikely that during the American session we will observe the bears' attempts to actively sell the euro, so the whole focus will shift to protecting the nearest resistance of 1.1366. An exit above this level will return the market to buyers of risky assets. Therefore, only the formation of a false breakdown at 1.1366 and a sharp jump in producer prices in the United States - all this will increase pressure on the pair and form an entry point into short positions to reduce to the area of 1.1325 formed by the results of European trading. A breakdown and a bottom-up test of this range will give an additional signal to open short positions already with the prospect of falling to a large weekly low of 1.1283, and a more distant target will be the 1.1235 area, where I recommend fixing the profits. In the case of a rise in the euro and the absence of bears at 1.1366, it is best not to rush with sales. The optimal scenario will be short positions when forming a false breakdown at the maximum of 1.1406, above which it will be quite problematic for bulls to get out. There will be active profit-taking on long positions from speculative players. You can sell EUR/USD immediately on a rebound from the maximum of 1.1452, or even higher - around 1.1491 with the aim of a downward correction of 15-20 points.
The COT report (Commitment of Traders) for February 8 recorded the growth of long positions and the reduction of short ones. This report already takes into account the meeting of the European Central Bank, at which its president Christine Lagarde made it clear to all market participants that the regulator will act more aggressively if the observed picture with inflation does not change, or changes for the worse. Last week, officials from the ECB took a wait-and-see attitude, and a technical reversal of the bull market led to a decline in the EUR/USD pair. Demand for risky assets also decreased due to the risk of a military conflict between Russia and Ukraine. However, a more weighty argument for the observed downward movement of the EUR/USD pair is the actions of the Federal Reserve System about interest rates. On Monday, February 14, an extraordinary meeting was held, the results of which were preferred to be hidden from the public - this is even more adding fuel to the fire that is flaring up around high inflationary pressure in the United States. Some economists expect that the central bank may resort to more aggressive actions and raise rates immediately by 0.5% in March this year, rather than 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 increased from the level of 213,563 to the level of 218,973, while short non-commercial positions decreased from the level of 183,847 to the level of 180,131. This suggests that traders continue to build up long positions with every good decline in the European currency. At the end of the week, the total non-commercial net position increased slightly and amounted to 38,842 against 29,716. The weekly closing price jumped and amounted to 1.1441 against 1.1229 a week earlier.
Signals of indicators:
Moving averages
Trading is conducted above 30 and 50 daily moving averages, which indicates an attempt by euro buyers to return to the 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 a decline, the lower limit of the indicator around 1.1283 will act as support.
Description of indicators
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