02.03.202109:00 Forex Analysis & Reviews: EUR/USD: plan for the European session on March 2. COT reports. Euro sellers broke through support at 1.2037, now aiming for a new low (1.2003)

To open long positions on EUR/USD, you need:

Yesterday, three signals for entering the market appeared at once. Let's take a look at the 5-minute chart and break down all the entry points. In the first half of the day, the bulls repeatedly tried to rise above resistance at 1.2093, but the pair rebounded off this range each time, indicating a possible succeeding decline for the euro, which happened. As a result, the fall only stopped in the support area of 1.2037, from where I recommended buying the euro immediately upon a rebound. The upward movement was 20 points. In the afternoon, another false breakout was formed in the support area of 1.2037, which caused the euro to rise by 25 points. However, the enthusiasm of the buyers ended there.

Before talking about the prospects for the EUR/USD movement, let's see what happened in the futures market and how the Commitment of Traders (COT) positions changed. The COT report for February 23 revealed that there were no significant changes in the positions of large players, however, the growth of short positions shows how the buyers' advantage is starting to fade. This time, it was not possible to quickly win back the sharp decline in the pair, which we have observed since the middle of last week. The sharp rise in bond yields in many developed countries favors the US dollar, as investors expect America to be the first to start raising interest rates, which makes the greenback more attractive. Buyers of risky assets should not rush to return to the market, and it is better to wait for lower prices. A good advantage for the euro is the moment when quarantine and isolation measures begin to ease in European countries: Germany has already announced its plan in this direction, but it has not yet come to the point. It is also necessary to wait for the moment when the service sector will start working again in full force, which will lead to an improved economic outlook and will also strengthen the EUR/USD pair. The COT report indicated that long non-commercial positions rose to 228,501 from 222,895, while short non-commercial positions rose from 82,899 to 90,136. As a result, the total non-commercial net position fell again from 140,006 to 138,365 for the second consecutive week. The weekly closing price was 1.2164 against 1.2132 a week earlier.

Exchange Rates 02.03.2021 analysis

Today we have a fairly large amount of fundamental data: reports on the German labor market and inflation in the eurozone will be published in the first half of the day, and closer to the middle of the US session, Federal Reserve representatives will speak. If the eurozone reports turn out to be better than economists' forecasts, then the pressure on the euro may ease, which will lead to a slight upward correction in the pair. This morning buyers will focus on surpassing and getting the pair to settle above the 1.2037 resistance, which they missed in today's Asian session. Testing this area from top to bottom creates an excellent signal to open long positions in euros in hopes to rise to a high of 1.2093, where I recommend taking profits. There are also moving averages that play on the side of sellers. Bulls will then aim for resistance at 1.2140. If buyers are not active during the European session, and the eurozone reports turn out to be disappointing: we can expect the euro to be under pressure and it could fall to the support area of 1.2003, where a divergence will be formed on the MACD indicator. Therefore, you can open long positions from this level immediately on a rebound, counting on an upward correction of 20-25 points within the day. The next major support is seen at 1.1952.

To open short positions on EUR/USD, you need:

Bears broke through 1.2037 and we can expect a succeeding decline for the euro as long as trading is carried out below this range. You can open new short positions in the first half of the day amid the downward trend, but only do so if a false breakout forms in the resistance area of 1.2037. This scenario may come true in case we receive weak data on inflation in the euro area as well as the labor market in Germany. A disappointing report will significantly affect the market and cause large sellers to return. In this case, the closest target will be the low of 1.2003 - as the pair's succeeding direction depends on whether the pair surpasses it or not. A breakthrough of this level will lead to a larger will to pull down EUR/USD and lead us to a low of 1.1952, where I recommend taking profits. If we continue to observe an upward trend in the first half of the day, and the bears are not active in the resistance area of 1.2037, then it is best to hold back from short positions until the test of the area of 1.2093, where the moving averages that play on the side of sellers pass. From there, you can sell EUR/USD immediately on a rebound in hopes of pulling down the pair by 20-25 points within the day. The next major resistance is seen around 1.2140.

Exchange Rates 02.03.2021 analysis

Indicator signals:

Moving averages

Trading is carried out below 30 and 50 moving averages, which shows how sellers are in control of the market.

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 1.2020 area will lead to a new wave of decline for the euro. A breakout of the upper border of the indicator in the 1.2060 area will cause the pair to rise.

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.

*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.

Miroslaw Bawulski,
Experto Analítico
Grupo InstaForex © 2007-2021
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