To open long positions on EUR/USD, you need:
The euro is still under pressure, and the pair reached another low around 1.1760, which I drew attention to in my afternoon forecast. Let's take a look at the 5 minute chart and talk about what happened. You can clearly see that the bulls are protecting 1.1804, forming a false breakout there, counting on a repeated upward correction of the pair, which leads to creating an excellent entry point into long positions. However, by the middle of the day, it was not possible to wait for a sharp growth from the pair, and the upward movement was around 13 points. I decided not to hold long positions against the downward trend any further and left the market. Then the bears achieved a second breakthrough of the 1.1804 level, but I quickly missed it. This level was surpassed when it was tested from the bottom up, which canceled all plans to enter short positions. For this reason, I was forced to miss the moment when the euro fell to the 1.1760 level. By the end of the day, almost after the moment when support at 1.1760 was updated, to which we fell short of by only two points, it was finally possible to open long positions immediately on a rebound, counting on an upward correction.
No important fundamental reports on the eurozone economy this morning, so everyone will be focused on the EU summit, where the leaders of the countries discuss the current problems associated with Covid-19 and the eurozone economy. It is likely that the outcome of this meeting could affect the euro's direction in the short term. The bulls' main task in the first half of the day is to protect support at 1.1760. Forming a false breakout there (similar to the entry point, which I analyzed above generates a signal to open long positions in hopes of an upward correction and return to resistance at 1.1802, where I recommend taking profits. A breakthrough and being able to settle above this level will create an additional entry point to long positions for the purpose of reaching a high like 1.1842. If the bulls are not that active in the support area of 1.1760, and traders are not pleased with the results of the EU summit, then EUR/USD will most likely be under pressure again. In this case, I advise you to open new long positions on a rebound after updating the next lows around 1.1714 and 1.1682. You can count on them for an upward correction of 20-25 points within the day.
To open short positions on EUR/USD, you need:
And while the data on the IFO business environment indicator in Germany is unlikely to significantly affect the market, the bears will be closely watching this indicator: weak data may increase pressure on the euro, which will lead to a breakthrough and consolidation below support at 1.1760. Testing this level from the bottom up creates an excellent signal for sustaining the bear market that has been observed this week. In this case, the closest targets will be lows like 1.1714 and 1.1682, where I recommend taking profits. If EUR/USD grows, then it is best not to rush to sell in the afternoon: the best option for opening short positions would be to form a false breakout in the resistance area of 1.1802. If the bears are not that active there, then I recommend postponing short positions immediately to rebound from a large resistance at 1.1842, counting on a downward correction of 20-25 points within the day.
The Commitment of Traders (COT) report for March 15 clearly shows how the sharp reduction of long positions is taking place, however, the growth of those who want to sell the euro is gradually slowing down. Despite this, the market remains on the side of the sellers of risky assets, which may lead to forming a downward trend. This is confirmed by the graph of the euro's decline, which we have been observing since the end of February this year. The sharp rise in US 10-year bond yields favors the dollar as investors expect America to be the first to start raising interest rates, making the greenback more attractive. The recent Fed meeting has once again convinced investors that the US economy is recovering much faster than expected, increasing the risk of an earlier inflationary jump. At the moment, it is best not to rush into euro purchases, but to wait for lower prices. Another factor in the medium-term pressure on the euro is the rise in the incidence of coronavirus in the eurozone countries and the weak vaccination program. The problems with the Astrazeneca vaccine do not add confidence to investors, who are betting on a stronger summer growth rate for the EU economy. One can expect an improvement in the economic outlook for the eurozone only when restrictions are lifted and the service sector is restored, which will return the medium-term trend of strengthening EUR/USD. The COT report indicated that long non-commercial positions fell from 207,588 to 195,857, while short non-commercial positions only rose from 105,624 to 105,881. As a result, the total non-commercial net position fell from 101,964 to 89,976 for the fifth consecutive week. The weekly closing price was 1.1926 against 1.1812 a week earlier.
Indicator signals:
Moving averages
Trading is carried out below 30 and 50 moving averages, which indicates that the euro will continue to fall in the short term.
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 breakout of the lower border of the indicator in the 1.1750 area will lead to a larger downward movement for the euro. A breakout of the upper border of the indicator in the 1.1810 area will lead to a new wave of growth for 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.
