08.02.202113:15 Forex Analysis & Reviews: EUR/USD: plan for the US session on February 8 (analysis of morning trades)

To open long positions on EURUSD, you need to:

In my morning forecast, I paid attention to the level of 1.2047 and recommended that you make decisions on entering the market from it. On the 5-minute chart, I highlighted the area where a false breakout was formed, and I advised opening short positions when forming it. However, at the time of writing, this did not lead to a major downward movement of the euro. The fundamental data released in the first half of the day also did not affect the exchange rate of the EUR/USD pair, which continues to trade in a narrow side channel.

From a technical point of view, nothing has changed. Given that in the second half of the day, important macroeconomic statistics are not released, most likely the bulls will try to keep the market on their side, having taken a second test of the resistance of 1.2047 already during the US session. A test of this level from top to bottom forms an excellent signal to buy the euro with the aim of further growth in the area of the maximum of 1.2087, where I recommend taking the profits. The longer-range target of the bulls remains the maximum of 1.2129. If the pressure on the euro only increases in the second half of the day, and we see a normal downward correction, then buyers will need to focus on protecting the support of 1.2003, where the moving averages play on the side of the bulls. The formation of a false breakout forms a good entry point into long positions in the expectation of continuing the upward correction of the pair. If there is no activity of buyers at this level, I recommend postponing long positions until the test of the minimum of the year in the area of 1.1952, from where you can buy the euro immediately on the 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 worked in the first half of the day, achieving the formation of a false breakout in the resistance area of 1.2047. Even though there was no major downward movement, as long as trading is conducted below the level of 1.2047, the pressure on the euro will remain. And though the President of the European Central Bank, Christine Lagarde, has not had a major impact on the European currency, the bears can count on the return of EUR/USD to the support area of 1.2003, from the breakdown of which will determine the future direction of the pair. A breakout and a test of this level from the bottom up will form a new entry point for sales, which will push EUR/USD to the annual minimum in the area of 1.1952, where I recommend fixing the profits. If in the second half of the day we continue to observe the upward correction of the euro, and the bears do not show any activity during the next test of resistance at 1.2047, then it is best to postpone short positions until the renewal of the maximum 1.2087, from where you can sell EUR/USD immediately on a rebound to reduce by 20-25 points within the day.

Let me remind you that the COT report (Commitment of Traders) for January 26 recorded a sharp increase in long positions and a reduction in short ones. The incoming data limits the upward potential of the euro, as does the fact that vaccination in the euro area will take place at a slower pace than expected. This is sure to affect GDP for the 1st quarter of this year, however, it is unlikely to seriously affect the medium-term prospects for the recovery of EUR/USD. With each significant downward correction of the pair, the demand for the euro returns, 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. However, the risk of extending the quarantine measures in February of this year is still a deterrent to the growth of the euro. The COT report shows that long non-profit positions increased from the level of 236,533 to the level of 238,099, while short non-profit positions decreased from 73,067 to the level of 72,755. Due to the continued growth of long positions, the total non-commercial net position rose to 165,344 from 163,466 a week earlier.

Signals of indicators:

Moving averages

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.

Bollinger Bands

A break of the lower limit of the indicator in the area of 1.2025 will increase the pressure on the euro. A break of the upper limit of the indicator in the area of 1.2047 will lead to a new wave of growth of the pair.

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.