06.03.2021 08:05 Forex analysis: EUR/USD trading plan for the week of March 8-12. New COT report (Traders\’ commitments). Investors are in a panic over rising yields on U.S. government bonds.
Forex Traders Reviews Trading Plan
06.03.202108:05 Forex Analysis: EUR/USD Trading Plan for The Week of March 8 -12. New COT report (Traders’ commitments).
Up to 07:00 2021-03-08 UTC/1 10100 EUR/USD 24H.
For the second week in a row, the euro/dollar pair collapses. Late last week, the United States released fairly good macroeconomic statistics, as well as the U.S. Air Force was attacked by Syrian facilities, which immediately triggered an increase in “anti-risk” sentiment in the markets. But at the end of last week, the strengthening of the dollar looked rather questionable. One could get the impression that this was only a minute’s clouding of market awareness, followed by a resumption of the systematic decline of the US currency. This week, however, investors have found more and more factors in favor of the U.S. dollar. Not all of them can be called logical, but what is the difference, whether they are logical or not, if most market participants react to them, and the price is very dependent on them? This week ended with another decline in steam, this time again due to strong macroeconomic statistics due to the ocean. So, in just one week, the US currency has broken the absolutely bullish trend of the euro/dollar pair. The 50.0% level for Fibonacci, which we have been talking about in recent weeks, has been defeated. The price also left the Ishimoku cloud, so the chances of further strengthening the dollar rose sharply. What few expected happened. However, we always recommend to our readers any fundamental theories or assumptions to be supported by technical factors and specific signals. Keep in mind that this is a market and no one in the world can predict its behavior with a 100% probability, and also take into account all the factors that affect the formation of the exchange rate at the moment.
In the last week of reporting (23 February – 1 March), the EUR/USD decreased by 110 points. Over the past few months, we have supported this option as a continuation of the global upward trend, and partly this scenario has been confirmed by bed reports. However, we would like to remind you that since September last year either a strong correction in the euro/dollar pair or a new downward trend. This proposal is based solely on cot reports. It’s simple: the green and red lines of the first indicator in the illustration, which show the net positions of the “Non-Commercial” and “Commercial” trading groups, reached the point of maximum divergence as early as September. These points are considered trend endpoints or as harbingers for its completion. If these lines begin to move toward each other, it means that the mood of non-profit traders and traders is changing the other way around, and with them the trend. However, the pandemic and the crisis, as well as the unprecedented actions of central banks, which resulted in the strongest increase in the money supply and, as a result, the imbalance between the monetary masses of different currencies, ultimately led to the fact that this phenomenon did not reverse the trend. But all the time since September, the big players, they say, have been on the edge of the abyss. The green and red lines were slightly narrowed and then spread again, that is, this signal began to have a delayed execution. Therefore, only according to COT reports can we say that now is a great time to continue creating a new downward trend. Moreover, during the reporting week, professional traders closed 8,000 purchase agreements and opened 8,000 sales contracts. In this way, their net position decreased by 16,000, meaning their mood became more bearish.
This week there have been many interesting fundamental and macroeconomic events. However, in general, traders throughout the week followed only one factor – the factor of rising yields on U.S. government bonds, which for some reason began exactly a week ago to provoke a strong strengthening of the U.S. currency (if that is the case, it is certainly not a trivial coincidence). Previously, we pointed out that government bond yields have been rising for a long time, and the fact that yields are rising indicates low demand for government loans and investor concerns about future inflation. These are therefore more bearish factors for the US currency. However, the US dollar has been doing well in the last 7 days Commercial. And markets don’t think too much about the stubborn factor, the rise in government bond yields, or the decline. The pound has also seen little growth over the past five months, but the currency has been rising and rising all this time. In this way, it is possible that the bears have reversed the long-term bullish trend. If so, even a factor in a new package of stimulus measures for the U.S. economy for $2 trillion may not help the U.S. currency. The overall conclusion is that the foundation is still not on the dollar side, but technology is now a downward trend. In this way, we will develop a downward trend.
Trading plan for the week 8 – 12 March:
1) Within a 24-hour period, the entire technical picture is confused. The couple suddenly turned down and started a strong downward movement, which raises some questions from a fundamental point of view. Steam quotes are fixed below the Ishimoku cloud and below 50.0% for Fibonacci. Therefore, theoretically on the steam road to the south there is still an important level of 61.8% for Fibonacci – 1.1887. If it stops the bears, a new round of upward movement may begin, which in a 4-hour and hourly timeline will create an upward trend.
2) In fact, we can now conclude that the downward trend has started. However, there are many factors that can now affect the euro/dollar exchange rate, and many of them speak of opposite directions of movement. Thus, it is now recommended to trade on a downgrade, using a younger time frame, because there is a clear trend. It should be remembered, however, that from a fundamental point of view, the likelihood of a new and strong fall in the US currency in 2021 is high.
Price support and resistance (resistance/support) – levels that are targets when opening purchases or sales. Take Profit levels can be placed near them.
Ishimoku Ratios, Bollinger Bunds, MACD.
Support and resistance areas are areas from which the price has repeatedly rebounded.
Indicator 1 on COT charts is the net position size of each category of traders.
Indicator 2 on COT charts is the net position size of a non-commercial group. This market analysis is informative and is not a transaction guide.
Respect,Analyst: Stanislav Polyanskygk InstaForex © 2007-2021