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16.03.2021 02:10 PM
EUR/USD: plan for the US session on March 16 (analysis of morning trades)

To open long positions on EURUSD, you need to:

Nothing interesting happened in the first half of the day. There were no signals to enter the market due to the same low intraday volatility that has persisted today. Despite the good data on the indices of sentiment in the business environment in Germany and the eurozone, the euro reluctantly approached the resistance of 1.1939 in the expectation of its breakdown already in the course of US trading. However, it is unlikely that anything serious will happen in the second half of the day, as all the focus is still shifted to tomorrow's meeting of the Federal Reserve System, which forces traders to take a wait-and-see position.

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It will be possible to talk about the return of the euro market by buyers under their control only after a breakout and a top-down test of the resistance of 1.1939. Only from this level will a good signal be formed to open long positions in the expectation of a resumption of the bull market. Poor data on retail sales in the US may contribute to this, as the morning fundamental statistics for the eurozone were quite good. In this scenario, you can expect a larger increase in EUR/USD with a return to the maximum of last week in the area of 1.1989, where I recommend taking the profits. If the bulls do not show much activity in the area of 1.1939, or the pressure on the euro will continue in the second half of the day – it is best to postpone purchases until the test of larger support of 1.1884, from which you can buy the euro immediately for a rebound in the expectation of an upward correction and 20-25 points inside the day. The next major level is seen in the area of 1.1838.

To open short positions on EURUSD, you need to:

As long as trading is below 1.1939, the pressure on the euro will continue. Good data on the growth of retail sales in the United States may give traders confidence in a more active recovery of the US economy in the 1st quarter, which will lead to another wave of decline in the EUR/USD pair. The nearest goal in this scenario will be the support of 1.1884, where I recommend fixing the profit. The next major level is seen in the area of 1.1838. If the pair grows in the second half of the day, only the formation of a false breakout in the resistance area of 1.1939 will be a signal to open short positions in the continuation of the downward trend. If the bears do not show activity in the area of this level – it is best to postpone sales until the test of a larger resistance of 1.1989, from which you can sell the euro immediately on a rebound in the expectation of a downward correction of 25-30 points within the day. The next major level is visible only in the area of 1.2047.

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Let me remind you that the COT report (Commitment of Traders) for March 9 clearly shows how there is a sharp reduction in long positions and a very large increase in short positions, which indicates a continued shift of the market towards sellers of risky assets. This is confirmed by the chart of the fall of the euro, which we have been watching since the end of February this year. The sharp rise in bond yields of many developed countries continues, which plays in favor of the US dollar, as investors expect that the United States will be the first to start raising interest rates, which makes the US dollar more attractive. The recent meeting of the European Central Bank did not change the market, as the decisions taken were not critical and did not affect the mood of investors. It is best not to rush into buying euros but to wait for lower prices. Another factor of medium-term pressure on the euro is the repeated increase in the incidence of coronavirus. The slow vaccination program is pushing the lifting of quarantine measures to a later date. Only with the lifting of restrictions and the restoration of the service sector can we expect an improvement in the economic prospects of the eurozone, which will return the medium-term trend to the strengthening of the EUR/USD. The COT report shows that long non-profit positions declined to 207,588 from 222,655, while short non-profit positions rose from 96,667 to 105,624. As a result, the total non-commercial net position declined again for the fourth week in a row to 101,964 from 125,988. The weekly closing price was 1.1812 against 1.2048 a week earlier.

Signals of indicators:

Moving averages

Trading is conducted in the area of the 30 and 50 daily moving averages, which indicates the sideways nature of the market.

Note: The period and prices of the 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

Low volatility does not give signals to enter the market.

Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-profit 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 the short and long positions of non-commercial traders.
Miroslaw Bawulski,
Analytical expert of InstaForex
© 2007-2024
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