EUR/USD: trading plan for American session on February 21. EUR ignores PMI data
February 21, 2023 3:22 pm
In my morning article, I turned your attention to 1.0664 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 decline and a false breakout of this level generated a good entry point into long positions. The pair rose by more than 20 pips. However, EUR bulls failed to push the pair higher after the release of the eurozone PMI indices did not strongly support buyers. So, there was no sharp upward movement. In the afternoon, the technical outlook was revised completely.
When to open long positions on EUR/USD:
Today, the US will unveil the Manufacturing and Services PMI indices as well as the Composite PMI index. If the figures advance, it will boost the US dollar, causing a drop in EUR/USD. If the PIMI indices are downbeat, which is more likely, the euro could assert strength. Traders are likely to pay zero attention to the US existing home sales report. Despite these forecasts, I advise you not to open long positions until a decline to a low of 1.0615 and a false breakout of this level. After that, the pair could recover to the resistance level of 1.0677, formed in the morning. A breakout and a downward test of 1.0677 amid weak PMI indices will create new entry points into long positions with a jump to 1.0740. A breakout of 1.0740 will force the bears to close their Stop Loss orders, changing the market trend. It may give a buy signal with the prospect of a rise to 1.0800 where I recommend locking in profits. If EUR/USD declines and buyers show no activity at 1.0615 in the afternoon, the pressure on the pair will escalate. A breakout of this level will only facilitate the bearish trend. In this case, you should pay attention to the support level of 1. 0565. Only a false breakout of this level may provide a new buy signal. You could buy EUR/USD at a bounce from 1.0525 or 1.0484, keeping in mind an upward intraday correction of 30-35 pips.
When to open short positions on EUR/USD:
It is better to sell EUR/USD at the resistance level of 1.0677. At this level, the moving averages are passing. As long as the bears control this level, a large sell-off in the afternoon may happen. A false breakout of 1.0677 after the release of PMI indices will indicate that large traders have entered the market. In this case, the pair could decline to 1.0615. A breakout and an upward retest of this level will give a sell signal with a drop to 1.0565. It will boost the bearish sentiment. A decrease below this range is likely to trigger a large downward movement to 1.0525 where I recommend locking in profits. If EUR/USD rises during the US session and bears show no energy at 1.0677, which is likely amid weak US data, I advise you to postpone short positions until a breakout of 1.0740. You could sell EUR/USD at a bounce from 1.0800, keeping in mind a downward intraday correction of 30-35 pips.
COT report
Due to a technical failure of the CFTC that has been going on for more than two weeks, new COT reports continue to be delayed. The most recent data was published on January 24.
The COT report for January 24 logged a rise in both short and long positions. Traders have significantly increased long positions following hawkish speeches of ECB policymakers. They are betting on further monetary tightening by the ECB and the Fed’s dovish stance. The US regulator may reduce the pace of tightening for the second time in a row. Weak macro stats on the US economy, namely a drop in retail sales and a slowdown in inflation may force the central bank to take a pause in rate hikes to avoid any damage. This week, several central banks will hold their meetings. Their results will eventually determine the trajectory of the euro/dollar pair. According to the COT report, the long positions of the non-commercial group of traders increased by 9,464 to 237,743 while short positions advanced by 2,099 to 103,394. At the end of the week, the total non-commercial net position rose to 134,349 from 126,984. It appears investors believe in the upside potential of the euro. Nevertheless, they are waiting for more clues from central banks regarding interest rates. The weekly closing price grew to 1.0919 from 1.0833.
Indicators’ signals:
Trading is carried out below the 30 and 50 daily moving averages, which indicates market uncertainty.
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 1.0690 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.
The material has been provided by InstaForex Company – www.instaforex.com
In my morning article, I turned your attention to 1.0664 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 decline and a false breakout of this level generated a good entry point into long positions. The pair rose by more than 20 pips. However, EUR bulls failed to push the pair higher after the release of the eurozone PMI indices did not strongly support buyers. So, there was no sharp upward movement. In the afternoon, the technical outlook was revised completely.
When to open long positions on EUR/USD:
Today, the US will unveil the Manufacturing and Services PMI indices as well as the Composite PMI index. If the figures advance, it will boost the US dollar, causing a drop in EUR/USD. If the PIMI indices are downbeat, which is more likely, the euro could assert strength. Traders are likely to pay zero attention to the US existing home sales report. Despite these forecasts, I advise you not to open long positions until a decline to a low of 1.0615 and a false breakout of this level. After that, the pair could recover to the resistance level of 1.0677, formed in the morning. A breakout and a downward test of 1.0677 amid weak PMI indices will create new entry points into long positions with a jump to 1.0740. A breakout of 1.0740 will force the bears to close their Stop Loss orders, changing the market trend. It may give a buy signal with the prospect of a rise to 1.0800 where I recommend locking in profits. If EUR/USD declines and buyers show no activity at 1.0615 in the afternoon, the pressure on the pair will escalate. A breakout of this level will only facilitate the bearish trend. In this case, you should pay attention to the support level of 1. 0565. Only a false breakout of this level may provide a new buy signal. You could buy EUR/USD at a bounce from 1.0525 or 1.0484, keeping in mind an upward intraday correction of 30-35 pips.
When to open short positions on EUR/USD:
It is better to sell EUR/USD at the resistance level of 1.0677. At this level, the moving averages are passing. As long as the bears control this level, a large sell-off in the afternoon may happen. A false breakout of 1.0677 after the release of PMI indices will indicate that large traders have entered the market. In this case, the pair could decline to 1.0615. A breakout and an upward retest of this level will give a sell signal with a drop to 1.0565. It will boost the bearish sentiment. A decrease below this range is likely to trigger a large downward movement to 1.0525 where I recommend locking in profits. If EUR/USD rises during the US session and bears show no energy at 1.0677, which is likely amid weak US data, I advise you to postpone short positions until a breakout of 1.0740. You could sell EUR/USD at a bounce from 1.0800, keeping in mind a downward intraday correction of 30-35 pips.
COT report
Due to a technical failure of the CFTC that has been going on for more than two weeks, new COT reports continue to be delayed. The most recent data was published on January 24.
The COT report for January 24 logged a rise in both short and long positions. Traders have significantly increased long positions following hawkish speeches of ECB policymakers. They are betting on further monetary tightening by the ECB and the Fed’s dovish stance. The US regulator may reduce the pace of tightening for the second time in a row. Weak macro stats on the US economy, namely a drop in retail sales and a slowdown in inflation may force the central bank to take a pause in rate hikes to avoid any damage. This week, several central banks will hold their meetings. Their results will eventually determine the trajectory of the euro/dollar pair. According to the COT report, the long positions of the non-commercial group of traders increased by 9,464 to 237,743 while short positions advanced by 2,099 to 103,394. At the end of the week, the total non-commercial net position rose to 134,349 from 126,984. It appears investors believe in the upside potential of the euro. Nevertheless, they are waiting for more clues from central banks regarding interest rates. The weekly closing price grew to 1.0919 from 1.0833.
Indicators’ signals:
Trading is carried out below the 30 and 50 daily moving averages, which indicates market uncertainty.
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 1.0690 will serve as resistance.
Description of indicators
The material has been provided by InstaForex Company – www.instaforex.com
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