To open long positions on EURUSD, you need to:
In my morning forecast, I paid attention to the level of 1.2087 and recommended that you make decisions on entering the market from it. On the 5-minute chart, I highlighted the area where there was a breakdown of the above level, however, the reverse test of 1.2087 did not take place to enter long positions. So I was forced to miss this signal. It was not possible to wait for a false breakout at the level of 1.2087, by analogy with the sale, which I analyzed in my yesterday’s forecast. Weak data on the Italian economy, as expected, did not make significant changes in the market situation.
Given that important macroeconomic statistics are not released in the second half of the day, most likely, the bulls will try to keep the market on their side. To do this, they need to protect the support of 1.2087, which can be tested during the US session. The formation of a false breakout at this level will act as an additional signal to open long positions in the continuation of the bull market. An equally important task for buyers of the euro will be to break through and consolidate above the resistance of 1.2129, which the pair is now striving for. A test of this level from top to bottom forms an additional signal to open long positions in the euro already to update the maximum of 1.2129, where I recommend fixing the profits. If there is no activity in the support area of 1.2087 in the second half of the day, it is better to postpone long positions until the test of the minimum in the area of 1.2003, from where you can buy the euro immediately for a rebound in the expectation of an upward correction of 20-25 points within the day.
To open short positions on EURUSD, you need to:
The bears did not manage to do anything in the first half of the day at the level of 1.2087, even after weak fundamental data for Italy and Germany. It can be seen how the active actions of the Democrats, aimed at pumping the American economy with money, weaken the position of the US dollar against the euro. The main task of sellers for the second half of the day will be the return of EUR/USD to the support area of 1.2087. The further direction of the pair depends on the breakdown below this level. A breakout and a test of this area from the bottom up is the first entry point for sales, which will push EUR/USD to a minimum of 1.2047, where I recommend fixing the profits. If in the second half of the day we will continue to observe the upward correction of the euro, it is best to postpone short positions until the update of the maximum of 1.2129, but subject to the formation of a false breakdown there. I recommend selling the euro immediately for a rebound only in the area of the maximum of 1.2175.
Let me remind you that the COT report (Commitment of Traders) for February 2 recorded a sharp increase in short positions and a reduction in long positions, which reflects the downward correction of the pair in late January and early February of this year. Weak fundamental data on the eurozone economy and lower economic estimates, which were given by representatives of the European Central Bank last week, limit the upward potential of the euro, as well as the fact that vaccination in the eurozone will take place at a slower pace than expected. All this will lead to a double-dip recession of the European economy in early 2021, but it is unlikely to seriously affect the medium-term prospects for the recovery of the EUR/USD. Therefore, with each significant downward correction of the pair, the demand for the euro will only increase, and the lower the exchange rate, the more attractive it will become for investors. The prospect of lifting the quarantine will keep the market positive in the future. The COT report shows that long non-profit positions declined from 238,099 to 216,887, while short non-profit positions rose from 72,755 to 79,884. Due to the sharp decline in long positions, the total non-profit net position fell to 137,003 from 165,344 a week earlier. The weekly closing price was 1.2067 against 1.2142.
Signals of indicators:
Trading is conducted above 30 and 50 daily moving averages, which indicates the growth of the euro in the short term.
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.
In the case of a downward correction, the average border of the indicator in the area of 1.2065 will act as support.
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.
The material has been provided by InstaForex Company – www.instaforex.com
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