04.03.202104:06 Forex Analysis & Reviews: Forecast and trading signals for EUR/USD on March 4. COT report. Detailed analysis of yesterday's recommendations and the pair's movement during the day


Exchange Rates 04.03.2021 analysis

The euro/dollar pair was trading quite calmly on the hourly timeframe on March 2. At least no high volatility was noticed. Overnight trades were extra-calm, the pair spent the whole night in a range of about 10 points. The movement began with the opening of the London Stock Exchange. At first, the bulls tried to continue the upward movement that started the day before, however, they gave up very quickly. The price rebound from the Senkou Span B line triggered the first round of downward movement within the day. In yesterday's forecast, we advised you to trade bearish in the event of a rebound from this line or the Kijun-sen line, so the first signal that formed during the day is a sell signal. After it, the bears went down about 23 points, but failed to reach the target area of 1.2032-1.2042. A new rise followed the Senkou Span B line after the European Union Services PMI was released in the morning (figure 1 in the chart). This indicator turned out to be better than analysts' forecasts and increased in comparison with the previous report (44.7-45.7). Thus, it naturally grew by 37 points. However, the bulls folded again near the Senkou Span B line, a rebound occurred, and the price slumped, forming a second sell signal in a day. The chart clearly shows that the price spent no more than 20 minutes above the Senkou Span B line. The second signal was stronger and, as a result, the quotes dropped to the target area of 1.2032-1.2042, bringing 50 points worth of profit to traders. Figures 2, 3 and 4 mark the time of publication of the ADP report on changes in the number of employees in the private sector (2), the index of business activity in the US services sector (3) and the index for the non-manufacturing sector of the ISM in the US (4). The two most important reports, ADP and ISM, were significantly worse than forecasts. The number of jobs in the private sector increased by only 117,000 (against the forecast of 203,000), and the ISM index fell from 58.7 to 55.3. Thus, an upward movement began after these reports were released, which could also be worked out, taking into account two rebounds from the area of 1.2032-1.2042.


Exchange Rates 04.03.2021 analysis

We can observe a more general picture of the state of affairs on the hourly timeframe. The bears failed to overcome the area of 1.2032-1.2042 on March 3, so now the pair's quotes are likely to return to the Kijun-sen line and will try to settle above this line and the Senkou Span B line. You are advised to buy the EUR/USD pair on March 4 in case it rebounds (new) from the area of 1.2032-1.2042, in case the pair settles above the Kijun-sen and Senkou Span B lines or a rebound from them from above (for this, the bulls must first surpass them). You are advised to sell the pair in case of a rebound from the Kijun-sen, Senkou Span B lines or the 1.2145 level. I also recommend selling the pair if the price settles below these levels (lines), after leaving above them. You can sell the pair if the price surpasses 1.2032-1.2042. We recommend setting the Stop Loss level to breakeven if the price moves 15-20 points in the right direction. You are advised take profit near the nearest target level or line.

COT report

Exchange Rates 04.03.2021 analysis

The EUR/USD pair rose by 30 points during the last reporting week (February 16-22). In recent weeks, we have pushed for a continuation of the long-term upward trend. This is partly supported by the latest Commitment of Traders (COT) reports. Over the past two weeks, the mood of large traders has not significantly changed, and when the report was released, the number of open long positions among professional traders exceeded the number of open short positions three times. Thus, on the face of a bullish mood. The latest COT report did not show any major changes either. A group of non-commercial traders opened 6,500 Buy-contracts (longs) and Sell-contracts (shorts) during the reporting week. Thus, the net position of this group of traders did not change in any way, and the mood did not become more bullish or more bearish. However, for the third week in a row, the first indicator in the chart has signaled the unchanged sentiment of non-commercial traders (who, we recall, are the engine of the foreign exchange market). The green and red lines did not rise or fall during these three weeks. Thus, the major players took a wait-and-see attitude, as it were. But the days when the pair collapsed (Thursday and Friday of this week) were not included in the new COT report. Thus, since the beginning of September last year, major players have been aiming for a downward trend, but global fundamental factors prevent them from starting it. We have already mentioned global fundamental factors more than once, it all boils down to a huge increase in the money supply in the United States in 2020.

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.


Paolo Greco,
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