23.02.202208:19 Forex-elemzések és áttekintések: EUR/USD: plan for the European session on February 23. COT reports. The pressure on the euro eased, and the bulls managed to protect the important support of 1.1289

To open long positions on EUR/USD, you need:

Yesterday, several signals were formed to enter the market. Let's look at the 5-minute chart and figure out what happened. In my morning forecast, I paid attention to the 1.1318 level and advised you to make decisions on entering the market. Strong data on Germany pushed the euro to rise during the European session. However, a breakthrough and consolidation above the 1.1318 level occurred without a reverse test, so entry points into long positions were not formed. As a result, the first half of the day passed without deals, and therefore the technical picture was completely revised for the US session. Further growth of the euro against the background of a decrease in investor panic, together with a breakthrough of 1.1340, resulted in forming a signal to buy EUR/USD. In total, three entry points were formed to buy from this level. The pair showed an increase of 15-20 points each time, after which the bulls lost the initiative.

As it turned out, euro bulls are capable of more. After protecting the lower border of the horizontal channel, in which trading has been conducted since February 14, bulls have a real chance to return to its upper border of 1.1395. Today promises to be quite volatile, as interesting data on inflation in the eurozone for January of this year will be published. Further plans of the European Central Bank to curtail stimulus measures and tighten monetary policy will depend on its growth. Markets are still pessimistic about the geopolitical tensions between Russia and Ukraine, but demand for risky assets is gradually returning. It is important to protect the support of 1.1312 in the morning, formed by yesterday's results. Forming a false breakout there creates the first entry point into long positions in the continuation of the upward correction. However, in order to count on a larger recovery of EUR/USD, bulls should be more active and be able to surpass the resistance of 1.1338. A sharp jump in inflationary pressure in the eurozone will certainly increase traders' interest in the euro, and a breakthrough and a top-down test of 1.1338 - all this will lead to another buy signal and open the possibility for the pair to recover to the area of 1.1366. A breakthrough of this range will resume the bullish trend and open a straight road to a high of 1.1395 – the upper limit of the current wide horizontal channel from February 14. I recommend taking profits there. With the aggravation of the geopolitical conflict, the demand for the US dollar will return quickly, so be careful with buying euros at current levels. If the pair declines during the European session and there is no activity at 1.1312, everything can end very badly. Therefore, it is best not to rush long positions. The optimal scenario would be a false breakout at 1.1289, but you can buy the euro immediately for a rebound from the lows: 1.1262 and 1.1236 with the aim of an upward correction of 20-25 points within the day.

To open short positions on EUR/USD, you need:

Although bears failed to keep the euro at monthly lows yesterday, however, they showed themselves quite actively during the US session. Today, in order to keep the pair within the horizontal channel, the bears need to defend the resistance of 1.1338, which is now the focus of euro bulls. Forming a false breakout at this level, together with declining inflation in the eurozone and the speech of ECB Executive Board member Frank Elderson - all this will be a signal to open short positions in order to hit the intermediate level of 1.1312. A breakdown of this area and a reverse test from the bottom up will provide another signal to open short positions with the prospect of falling to the month's low at 1.1289. A more distant target will be the 1.1262 area. Its update will indicate a clear resumption of the bearish trend in the euro with the prospect of updating 1.1236 and 1.1201, where I recommend taking profits. In case the euro grows and the bears are not active at 1.1338, it is best not to rush with short positions. The optimal scenario will be short positions when forming a false breakout in the area of 1.1366. You can sell EUR/USD immediately for a rebound from 1.1395, or even higher - around 1.1427, counting on a downward correction of 15-20 points.

I recommend for review:

The Commitment of Traders (COT) report for February 8 showed that long positions increased while short ones decreased. This report already takes into account the European Central Bank meeting, at which its president Christine Lagarde made it clear to all market participants that the central bank 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 has 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 Federal Reserve's actions in relation to interest rates. An extraordinary meeting was held on Monday, February 14, 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.

Indicator signals:

Trading is conducted around the 30 and 50 day moving averages, which indicates the horizontal nature of the market.

Moving averages

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

Bollinger Bands

A breakthrough of the upper limit of the indicator in the area of 1.1350 will lead to a new wave of euro growth. Crossing the lower limit of the indicator in the area of 1.1312 will increase the pressure on the pair.

Description of indicators

• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
• MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-commercial 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 short and long positions of non-commercial traders.