24.03.2023 12:37 PM
EUR/USD: trading plan for American session on March 24. Overview of morning trades. EUR declines lower

In my morning article, I turned your attention to 1.0801 and recommended making decisions with this level in focus. Now, let's look at the 5-minute chart and figure out what actually happened. A breakout of 1.0801 occurred without an upward retest. Hence, I saw no sell signal. There were no other entry points. For the afternoon, the technical outlook has been slightly revised.

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When to open long positions on EUR/USD:

Bulls are now trying to protect 1.0724. If they succeed, a buy signal may occur. As long as trading is carried out above this level, there is a likelihood of a rise to 1.0785. Weak data on the US PMI Manufacturing, Services, and composite Indices could lead to a jump to 1.0785. A breakout and downward retest of this level might give an entry point into long positions. The pair could grow to 1.0830. It is will be quite difficult for bulls to push the pair higher. At this level, the moving averages are benefiting bears. Only a breakout of 1.0830 will force bears to close their Stop Loss orders, boosting the bullish trend. It could provide new entry points into long positions. The price is likely to touch 1.0874 where I recommend locking in profits. If EUR/USD declines and bulls show no activity at 1.0724 in the afternoon, the pressure on the euro may increase. If so, a bearish trend may start. A breakout of this level could trigger to a fall in EUR/USD to the support level of 1.0691. Only a false breakout will give new entry points into long positions. You could buy EUR/USD at a bounce from 1.0652 or 1.0614, keeping in mind an upward intraday correction of 30-35 pips.

When to open short positions on EUR/USD:

Sellers are in control. They need to protect 1.0785. In case of a jump to this level in the afternoon, only a false breakout may give a sell signal. The pair could fall again to 1.0724, which is now a pivot point. A breakout and an upward retest of this level amid strong US economic reports may trigger a decline to 1.0691. A decrease below this level will lead to a more significant fall to 1.0652, signaling a bear market at the end of the month. At this level, I recommend locking in profits. If EUR/USD rises during the US session and bears show no energy at 1.0785, which is unlikely, I would advise you to postpone short positions until a false breakout of 1.0830. You could sell EUR/USD at a bounce from 1.0874, keeping in mind a downward intraday correction of 30-35 pips.

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COT report

According to the COT report from March 7, the number of long positions dropped, whereas the number of short positions increased. Notably, the data is of zero importance at the moment as it was relevant two weeks ago. The CFTC is still recovering after a cyberattack. It is better to wait for new reports. This week, the Federal Reserve will hold a meeting, during which it may pause the monetary policy tightening. The fact is that the problems in the banking sector and the launch of a new credit swap line to support other banks with liquidity may seriously affect the economy. If Jerome Powell decides to raise the key rate higher, the US dollar is unlikely to receive support. Traders are pricing in the Fed's switch to a less hawkish stance and monetary policy loosening by the end of the year. The COT report unveiled that the number of long non-commercial positions dropped by 6,886 to 233,880, while the number of short non-commercial positions increased by 6,865 to 85,432. At the end of the week, the total non-commercial net position decreased to 148,448 against 165,038. The weekly closing price dropped to 1.0555 against 1.0698.

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Indicators' signals:

Trading is carried out below the 30 and 50 daily moving averages, which indicates a bearish sentiment.

Moving averages

Note: The period and prices of moving averages are considered by the author on the H1 (1-hour) chart and differ from the general definition of the classic daily moving averages on the daily D1 chart.

Bollinger Bands

If EUR/USD rises, the indicator's upper border at 1.0830 will serve as resistance.

Description of indicators

  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked yellow on the chart.
  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked 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 the short and long positions of non-commercial traders.
Miroslaw Bawulski,
Analytical expert of InstaForex
© 2007-2023
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