Forecast and trading signals for EUR/USD on February 19. COT report. Analysis of Thursday. Recommendations for Friday



The euro/dollar pair was correcting throughout the day on the hourly timeframe on February 19. Thus, the scenario that we hoped for the most - a correctional one, came true. The price has come as close as possible to the Kijun-sen line, so a rebound can be made from it in the next few hours. If this happens, then the downward movement may resume, although there is no trendline or trend channel at this time. However, the Kijun-sen line is still a very strong line, but a rebound from it must be clear in order to interpret it as a signal. If the rebound does not occur, then the upward movement may continue and resume the upward trend, which bears broke by surpassing the trend line. In our last review, we advised you to open new short positions in case the price rebounds off the critical line. Positions should not have been opened since the price has not yet reached the critical line. We did not recommend considering long positions at all. Everything will depend on whether or not the Kijun-sen line is overcome.



The lower linear regression channel turned to the upside on the 15-minute timeframe. Thus, an upward trend has formed in the short-term, but the price is standing in the way of the Kijun-sen line, which has not yet been tested. The higher linear regression channel allows the resumption of the quote's decline.

COT report


The EUR/USD pair fell by 10 points during the last reporting week (February 2-8). The movement, of course, was more volatile during the five working days, however, price changes, as we can see, are minimal. At the same time, the group of "non-commercial" traders opened 4,700 buy contracts (longs) and closed 2,600 sell contracts (shorts). Thus, they became more bullish, and the net position increased by 7,300 contracts. Of course, a week earlier the Commitment of Traders (COT) report showed much larger changes. A week earlier, professional traders massively closed buy contracts for the euro. However, the downward trend did not end there. We have already insisted on a correctional option in the long term several times. According to this scenario, the pair has corrected to the downside enough and currently has excellent chances for a new upward trend. The data of the COT report from a week ago questioned this option, but, as we can see, the latest COT report shows rising bullish sentiments among major market players. The indicators also eloquently show that the overall sentiment remains bullish in the market. The green and red lines of the first indicator, which represent the net positions of the non-commercial and commercial groups, began to narrow again a week ago, but are still far from each other. In the long term, based solely on the COT reports, we can say that the end of the upward trend has been brewing for a long time. But what if the demand for the US dollar remains non-existent?

No macroeconomic report from the European Union on Thursday. A secondary report on applications for unemployment benefits was released in the US. Recall that in one of his last speeches, Federal Reserve Chairman Jerome Powell noted that real unemployment in the country is much higher than statistical values. Thus, the data on claims for unemployment have become even less important than before. No other important information received for the day.

Several interesting reports planned for the EU and America on Friday. For example, indices of business activity in services and manufacturing. The manufacturing sector still does not raise any concerns in Europe. Business activity is confidently staying above the level of 50.0. But business activity in the service sector continues to cause concern. The latest report showed a value of 45.4, the forecast is 45.9. Even if it is exceeded, it is unlikely enough to go above the 50.0 level. Thus, the EU economy may continue to recover at a slower pace due to the service sector. Also, business activity indices will be published in the US, but both indices do not cause any worries here. The US economy continues to recover at a faster rate than the European one. The dollar has not yet been able to extract dividends from this, largely due to the exorbitant injection of dollars into the US economy by the government and the central bank, thanks to which a rather rapid recovery is taking place.

We have two trading ideas for February 19:

1) Buyers have released the initiative and the price has settled below the trend line. Thus, we advise you to continue not to rush into opening long positions. However, if the price surpasses the Kijun-sen line (1.2097), then it will be possible to resume buying with the targets at the extremum levels 1.2111 and 1.2145. Take Profit in this case can be up to 40 points.

2) Bears took a pause for a day, but if they stay below the critical line, they can still pull down the pair. Thus, you are advised to open short positions in case the price rebounds from the Kijun-sen line (1.2097) (may go down during the day) with the targets at the extremum levels of 1.2058 and 1.2004. Take Profit in this case can be up to 80 points.

Forecast and trading signals for GBP/USD

Explanations for illustrations:

Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.

Support and resistance areas are areas from which the price has repeatedly rebounded off.

Yellow lines are trend lines, trend channels and any other technical patterns.

Indicator 1 on the COT charts is the size of the net position of each category of traders.

Indicator 2 on the COT charts is the size of the net position for the "non-commercial" group.

The material has been provided by InstaForex Company -