To open long positions on EUR/USD, you need:

Last Friday, quite a lot of signals were formed to enter the market. Let's look at the 5-minute chart and figure out what happened. In my morning forecast, I paid attention to the level of 1.1449, and also recommended that you make decisions on entering the market. Weak data on Germany led to a correction of the pair and to the formation of a false breakout in the area of 1.1449 - a buy signal. After that, the euro rose to the resistance of 1.1481, where bears started to be more active. Having protected this range and formed a good entry point into short positions, the bears achieved a major drop in the euro after strong data on the US labor market. As a result, it was possible to observe the update of support at 1.1416 – more than 60 points of profit. A false breakout at 1.1416, similar to what I analyzed above, led to a signal to buy the euro and to an increase of 50 points at the end of the day.

There are no important fundamental statistics today, and most likely the bulls will focus on the speech of European Central Bank President Christine Lagarde, which will take place in the afternoon. Until then, the activity in the market will be quite calm and it seems to me that the pair will continue trading in a horizontal channel with the prospect of updating monthly highs closer to the middle of the week.

Given that the bullish trend continues in a fairly strong form, an important task for today is to protect the nearest support of 1.1416. Forming a false breakout at this level, along with strong data on changes in German industrial production and the investor confidence indicator from Sentix of the eurozone, create an excellent entry point into long positions in continuation of the upward trend. An equally important task is to control the middle of Friday's 1.1450 channel. A breakthrough of this range and consolidation above directly depends on the reaction to Lagarde's statements. A test of 1.1450 from top to bottom will lead to another buy signal and open up the possibility of recovery to the area of this month's high at 1.1481. However, it is unlikely that the bulls will stop there, so a breakthrough of this range will open a direct road to 1.1514 and 1.1562, where I recommend taking profits. If the pair declines during the European session and there is no activity at 1.1416, and there are moving averages that are still playing on the bulls' side, it is best to postpone long positions to 1.1390. However, I advise you to open long positions there when forming a false breakout. You can buy the euro immediately for a rebound from the 1.1363 level with the goal of an upward correction of 20-25 points within the day.

To open short positions on EUR/USD, you need:

Bears did a great job on Friday and managed to stop the bull market, but fundamental statistics helped. Today they don't have much to count on, so the whole focus will be on the nearest resistance. To keep the pair in the short-term horizontal channel, you need to try very hard not to miss the middle of 1.1450. Forming a false breakout there will be a signal to open short positions in order to pull EUR/USD to the area of 1.1416. Crossing this area depends entirely on the market's reaction to the data on the eurozone and Germany. If we see an exit below 1.1416, a reverse test from the bottom up of this range will provide another signal to open short positions with the prospect of falling to large lows: 1.1390 and 1.1363. A more distant target will be the 1.1336 area. I recommend taking profits there. In case the euro grows and bears are not active at 1.1450, it is best not to rush with short positions. The optimal scenario will be short positions when forming a false breakout in the area of 1.1481. You can sell EUR/USD immediately on a rebound from 1.1514, or even higher - around 1.1562, counting on a downward correction of 15-20 points.

I recommend for review:

The Commitment of Traders (COT) report for January 25 showed that long positions had increased while short ones decreased, which led to a further increase in the positive delta. The demand for risky assets will continue to persist, because even after the results of the Federal Reserve meeting, where there were clear hints of an increase in interest rates in March 2022, the market did not react with a serious drop in risky assets, and the changing balance of power speaks for itself. This week, everyone is waiting for the results of the European Central Bank meeting, at which a decision on monetary policy will be made. Some traders expect that the central bank may resort to more aggressive statements aimed at policy changes in the near future and to abandon measures to support the economy due to the threat of high inflation. However, most analysts do not expect changes from the ECB. Much will depend on whether the ECB agrees to fully complete its emergency bond purchase program as early as March this year, or not. If so, the demand for the euro will only increase, since such actions will sooner or later lead to an increase in interest rates in the eurozone. The COT report indicates that long non-commercial positions rose from the level of 211,901 to the level of 213,408, while short non-commercial positions fell from the level of 187,317 to the level of 181,848. This suggests that traders continue to build up long positions on the euro in hopes of building an upward trend. At the end of the week, the total non-commercial net position remained positive and amounted to 31,569 against 24,584. But the weekly closing price decreased and amounted to 1.1323 against 1.1410 a week earlier.

Indicator signals:

Trading is conducted above the 30 and 50 day moving averages, which indicates an upward trend for the pair.

Moving averages

Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differs from the general definition of the classic daily moving averages on the daily D1 chart.

Bollinger Bands

In case of a decline, the average border of the indicator around 1.1416 will act as support. In case of growth, the upper limit in the area of 1.1481 will act as resistance.

Description of indicators

• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in 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 short and long positions of non-commercial traders.