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EUR/USD 5M analysis.
During the first trading day of the week, the EUR/USD pair started falling again from the very opening of the market. During the day, it made more attempts to continue its downward movement, but still adjusted slightly at the end of the day. It is hardly possible to say now that this is the end of the fall of the European currency. Most likely, the bears just took a little break. As we expected yesterday, Monday was in a correction, but the volatility was still very high. Unfortunately, the pair is now at such price values where there is not a single extreme level because the last time the price was at these levels was more than a year ago. Therefore, no trading signals were generated on Monday. Perhaps for the best.
At the same time, the third round of negotiations between Kyiv and Moscow ended in Belarus. As we expected, there are no serious achievements and progress. The parties continue to stand their ground, which means that the military conflict persists. The Russian ruble on Monday fell to 150 rubles for 1 dollar and the general panic in the markets of the Russian Federation persists. Experts admit that the Russian currency can easily fall to 300 rubles for 1 dollar. This means that there is no question of any reassurance now. Accordingly, this mood may be reflected in the international currency market.
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 clearly 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 really 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 in order 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, and the price is very far from the trend line. Thus, on the one hand, the pair has room to adjust, and on the other hand, a strong downward trend persists. Geopolitics continues to have a strong impact on the pair and the lack of news about progress in negotiations can only upset traders. The European currency remains at risk. On Tuesday, 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 (1.0985) 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 8, only one report will be published in the European Union - the level of GDP for the fourth quarter in the third assessment. Since this is not the first or even the second assessment, we do not expect any reaction from traders. Nevertheless, the pair may continue to trade very actively and volatile, because the geopolitical background is clearly not letting traders go now. Therefore, you can expect strong movements in any direction. It is also necessary to adjust from time to time.
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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