01.02.202110:33 Forex Analysis & Reviews: Analysis and forecast for EUR/USD on February 1, 2021

Last Friday, the market closed trading in the first winter month of this year, as well as the next trading week. In today's article, we will look at these most senior timeframes, to understand what will be the direction of the main currency pair of the Forex market in the starting month. Naturally, it will not do without trading recommendations in the short term. But first, let us briefly talk about external factors, among which the most important is the COVID-19 pandemic. Unfortunately, the situation with the spread of the coronavirus epidemic does not think to go down. In several European countries, anti-records for the daily number of infections and the total number of deaths have been updated. In this regard, countries such as France, Germany, Norway, and some others are forced to close their borders, as well as extend and tighten quarantine measures and necessary restrictions. However, despite all the efforts made, the effect on them is still practically not felt. Not the least role in this deplorable situation is played by the universal vaccination of the population of European countries, which is very slow. One of the reasons for this situation is the failure of agreements on the supply of vaccines with the world's leading pharmaceutical companies. In this regard, more and more countries are forced to resort to the purchase of the Russian vaccine from COVID-19 "Sputnik V", as well as to the Chinese vaccine, which has proved to be very popular in some countries of central and southern Europe. The so-called term "Vaccine War" has already appeared. It is not difficult to guess that the supply of vaccines brings huge profits to pharmaceutical companies, so for the markets for antiviral drugs, a real war has unfolded. However, it is time to move on to the EUR/USD price charts, and let's see what the situation is on the monthly timeframe.

Monthly

After the previous two months of growth, the January trading for the euro/dollar currency pair ended with a decline. As you can see, attempts to break through the resistance of sellers at 1.2309, where the maximum values of December trading were shown, failed. After reaching the level of 1.2349, the pair turned in a southerly direction and ended trading in January at 1.2134. At the same time, the January candle can be classified as a "Shooting Star" reversal model, although, due to the presence of a rather large lower shadow, it has a not quite traditional shape. Nevertheless, the failed attempts to break through the resistance of sellers in the area of 1.2300, the long upper shadow, and the bearish body of the candle of last month set up a pessimistic mood. Judging by the monthly chart, the pair is likely to continue its downward trend in February. However, this assumption will be confirmed only in the event of a breakdown of the strong price support zone of 1.2060-1.2050. Let me remind you that the orange 200 exponential moving average is located at 1.2060, and the minimum values of January trading are marked at 1.2053. An alternative upward scenario will become possible only if the resistance of sellers in the area of 1.2350 is no less strong. In the first case, to confirm the seriousness of their intentions, the bears need to close February at 1.2050 or even better below the important psychological level of 1.2000. In turn, the euro bulls need not only to raise the quote above 1.2350 but also to close the month above this strong technical level. This is the picture seen on the highest timeframe.

Weekly

Trading on January 25-29 ended with a decline and losses of 0.30% for EUR/USD. However, you should pay attention to the very long lower shadow (tail) of the last candle. Usually, such tails indicate the unwillingness of the market to move the quote in the south direction. It is also worth paying attention to the fact that the price continues to be supported by the red line of the Ichimoku Tenkan indicator, which the bears have not yet managed to close trading below. Thus, judging by the weekly chart, the further direction of EUR/USD remains in question, which suggests considering options for positioning in both directions. However, given the picture on the monthly timeframe, at the moment, sales have a higher priority.

Trading recommendations for EUR/USD:

I will start with sales, the nearest of which I recommend considering after the rise to a strong resistance zone of 1.2185-1.2200. Above, you can look at the opening of short positions in the case of a short-term rise (without fixing) in the price area of 1.2240-1.2250. For purchases, it is better to open after declines, and at lower prices. The next purchases when the corresponding candle signals appear on smaller time intervals, I recommend considering another strong and significant mark of 1.2100. Below, you can try opening long positions at the prices of 1.2065-1.2055. That's all for now. In tomorrow's article on EUR/USD, we will look at smaller time intervals and make adjustments to today's recommendations.