EUR/USD 5M
The EUR/USD pair was trading more actively on Tuesday than on Monday. Overnight trades, as usual, were held with low volatility and in an absolute flat. Not surprising. More interesting movements began as soon as the European trading session began. The pair started the day above the critical line and fell during the first hours of the European session. The bulls and bears pulled the rope for about an hour, and in the end the bears retreated, and the bulls rebounded from the Kijun-sen line. This was the first intraday buy signal. According to our recommendations, the 1.1952 level was the target (which was the nearest). This level was subsequently reached, point to point. Thus, the first buy signal could bring around 20 points in profit. A little, but, as we can see, the upward movement was not strong, and so it was impossible to earn more from it. The main thing is that we reacted to key reversals on time. A rebound followed from the 1.1952 level, which did not raise any doubts at all, since the bulls did not even try to get the pair to settle above this level. Therefore, at this point, a sell signal was formed while the Kijun-sen line (1.1924) was the target. This signal also turned out to be correct, so traders could have earned around 20 more points. The US retail sales report (figure 2) was released when this signal was being processed, which turned out to be significantly worse than the analysts' forecasts (-0.5% m/m against -3.0% m/m). Therefore, the price could and should have formed an upward reversal here, but the bulls were weak and the pair's quotes continued to fall. The same applies to the US industrial production report (figure 3), which came out a little later. It also turned out to be weaker than forecasts (+ 0.4% m/m against -2.2% m/m), however, it did not add pressure to the dollar. As a result, quotes continued to fall to the 1.1911 level, which was immediately surpassed, and from which a rebound from below was also made. Thus, a third sell signal was formed, which is still being worked out. But since the price went down by around 20 points, Stop Loss can be set at breakeven. The index of business sentiment from the ZEW Institute that was released in the morning (number 1 in the chart) had no effect at all on the course of trading.
EUR/USD 1H
We can see that the upward trend line has been broken on the hourly timeframe, so formally there is a downtrend now. In principle, the euro/dollar pair is moving down and even fulfills all key lines and levels quite well. Therefore, in principle, we do not care about what the trend is right now. We try to work out all available signals during the day. Moreover, the downward trend is not so strong right now, and the fundamental background allows various options for further movement. The EU inflation report for February will be released on Wednesday morning. Meanwhile, the results of the Federal Reserve meeting will be announced in the evening, this also includes the Fed's forecast, as well as Fed Chairman Jerome Powell's press conference. Sharp reversals and an increase in movement are possible during such events, which are now extremely difficult to predict. Everything will depend on what Powell says. Therefore, at this time, we recommend placing Stop Loss on all open trades or leaving the market altogether. In general, you should trade from important levels and lines that are plotted on the hourly timeframe. The nearest levels are 1.1911 and 1.1863, as well as the Kijun-sen line. Signals can be rebounds and once levels and lines are surpassed. Do not forget about placing a Stop Loss order at breakeven if the price moves 15-20 points in the right direction.
COT report
Recall that the EUR/USD pair fell by 200 points during the last reporting week (March 2-8), which is quite a lot for it. However, in general, even with such a fall, the upward trend is still visible to the naked eye. Thus, so far, there is still no need to talk about an unambiguous change in the trend to a downward one on a global scale. Let us remind you that in recent weeks the mood of major market players has become much more bearish, as the total number of buy contracts (longs) decreased by 20,000, and sell contracts (shorts) increased by 30,000. If earlier there was a threefold difference between these figures, now it is already two times with an advantage of the former. In other words, over the past five weeks, professional traders have begun to believe less that the euro's growth will continue. As for the reporting week, the "non-commercial" group of traders continued the trend of the last weeks. Major players closed 14,000 buy contracts and opened 12,000 sell contracts during this week. Thus, the net position for this group of traders increased immediately by 26,000, and the mood of the group became much more bearish. The latest COT reports speak almost unambiguously in favor of the market sentiment changing to a downward one. Indicators also signal a very likely reversal of the previous trend, as the green and red lines of the first indicator continue to move towards each other. From our point of view, only one global factor can prevent this - this is the factor of a new potential growth of the money supply in the United States by $2 trillion.
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.
