EUR/USD – 1H.
Hello, traders! March 16 was another shocking day for global markets. Stock markets in the United States collapsed with a new force, so we had to stop trading. Everything was much calmer in the currency market, but it is not yet possible to conclude that the situation has stabilized. The “shock state” persists among traders. So I’m still waiting for various surprises that are not implied by graphical analysis. On the hourly chart, the quotes of the EUR/USD pair tried several times to close under the upward trend line but instead performed a consolidation over the downward trend corridor. Thus, at this time, there is already a signal to buy. At the same time, I fear for the prospects of the euro currency. There are doubts that the currency can continue to grow now.
EUR/USD – 4H.
According to the 4-hour chart, the EUR/USD pair performed two rebounds from the corrective level of 61.8% (1.1065) with a reversal in favor of the European currency. Thus, on the 4-hour chart, we also have a buy signal. However, after reaching the Fibo level of 100.0% (1.1239), the pair performed a rebound from it and a reversal in favor of the US currency with a fall to the corrective level of 76.4% (1.1130), which was also followed by a rebound. I believe that there is a situation in which bull and bear traders are beginning to show less activity than before. It may be an accident, or it may be a pattern. The market cannot break activity records every day. Thus, the rebound of quotes from the Fibo level of 100.0% in some way cancels the buy signals. Now you need to wait for either new signals or closing above the corrective level of 100.0%.
EUR/USD – Daily.
According to the daily chart, the euro/dollar pair performed a fall to the corrective level of 61.8% (1.1052). The rebound of quotes from this Fibo level similarly worked in favor of the beginning of the pair’s growth, which ended near the corrective level of 38.2% (1.1221). Thus, as on the 4-hour chart, further growth is in doubt, and there are no new signals to buy or sell.
EUR/USD – Weekly.
As seen on the weekly chart, the target of 1.1600 (approximate) remains in effect. Thus, if new buy signals appear and work out on the lower charts, then the level of 1.1600 will be the final and very realistic goal for bull traders. Of course, the markets as a whole remain in a state of shock, and the actions of the world’s central banks, which have regularly lowered rates in the past two weeks, do not add stability and calm. Nevertheless, on the first working day of the week, we can say that the shock state has subsided a little.
Overview of fundamentals:
On March 16, the calendar did not contain any important news in the United States and the European Union. I spoke about the unexpected Fed rate cut yesterday. By the way, traders were not too impressed with this decision. There was no new surge of activity.
News calendar for the United States and the European Union:
EU – business sentiment index from the ZEW Institute (10:00 GMT+00).
USA – change of the volume of retail trade (12:30 GMT+00).
USA – change in the volume of industrial production (13:15 GMT).
On March 17, several relatively important reports will be released in the EU and the US. The EU business sentiment index will show the mood of investors and analysts in March. It is easy to assume that this report will show an extremely low value. From the US, reports will come for February, so they may still contain a small bit of optimism.
COT report (Commitments of traders):
According to a new COT report, the total number of Long positions decreased among major players, while Short positions increased, which was clear even without the report, given the strong fall in the European currency quotes over the past week. However, there are also points that need to be highlighted. First, the total number of contracts continues to grow. That is, the activity of traders does not fall. Second, speculators get rid of Short positions and they are immediately picked up by hedgers. This suggests that market players who specialize in making profits from currency operations do not believe in a further fall in the euro. According to our observations, it is speculators who drive the market, and hedgers generally open opposite positions to insure against possible risks. Thus, given the strong reset of Short positions by speculators, I would say that there is a high probability of euro growth in the next week. However, you need specific buy signals to work out this trading idea.
Forecast for EUR/USD and recommendations for traders:
For the EUR/USD pair, there are now good chances to start a new upward trend. The overall correction from the previous upward trend was 61.8%. Thus, growth is now very likely, and several buy signals are already available. The targets are 1.1365 and 1.1524. However, there are also several rebounds from the “upper” Fibo levels that have stalled growth. Thus, it is best to buy small lots of the euro currency now, but in case of closing under the trend line on the hourly chart, exit the market.
Terms:
“Non-commercial” – major market players: banks, hedge funds, investment funds, private, large investors.
“Commercial” – commercial enterprises, firms, banks, corporations, companies that buy currency to ensure current activities or export-import operations.
“Non-reportable positions” – small traders who do not have a significant impact on the price.
The material has been provided by InstaForex Company – www.instaforex.com
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