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Euro fell after good report on US economy's growth rate


18 February 2021

I paid attention to forming a signal to enter short positions in the euro in my afternoon forecast. Let's take a look at the 5-minute chart and talk about what happened. Considering that the eurozone GDP report was slightly better than economists' forecasts, and the index of sentiment in the business environment in Germany and the eurozone significantly increased - this resulted in the euro's growth and the breakdown of resistance at 1.2149. For the sake of fairness, take note that I did not get a normal consolidation and the 1.2149 level was not tested from top to bottom, since this area was smeared, so I did not manage to enter long positions from this level as I had planned in my morning forecast. I marked the scenario in which I would enter long positions on the chart using blue lines.

After EUR/USD returned to the area below the 1.2149 level in the afternoon, it was also not possible to enter the bear market in time for a similar reason. And the deprivation of consolidation below 1.2110 resulted in creating a convenient sell signal, but I did not wait for a major fall in the pair.

First of all, the bulls need to regain control over the resistance level of 1.2048, which they missed yesterday afternoon. Consolidation and being able to test this level from top to bottom creates a signal to open long positions in anticipation of the EUR/USD recovery to the resistance area of 1.2084, where I recommend taking profits. Moving averages also pass there, playing on the side of sellers. Bulls will still aim for 1.2125, which will not be so easy to reach, since there is no reason for the euro to rise, and also because there is no important fundamental report on the eurozone that could contribute to growth. If EUR/USD is under pressure in the first half of the day, and the bulls cannot do anything with the resistance of 1.2048, then it is best to hold back from long positions until the test of the larger support of 1.2003, from which you can buy the euro immediately on a rebound, counting on an upward correction at 15 -20 points within the day. If there is no upward movement from this level, then I recommend postponing long positions until the 1.1952 low has been tested.

To open short positions on EUR/USD, you need: It is best to open short positions in the morning after forming a false breakout in the resistance area of 1.2048, which creates a good entry point to sell the euro in anticipation of falling to the support area of 1.2003, where I recommend taking profit.

An equally important task for sellers will be a breakout and consolidation below this level closer to the afternoon, testing it from the bottom up will create a new entry point into short positions (similar to yesterday), counting on a larger downward movement of the pair towards the 1.1952 low.The 1.1921 level will be a distant target. If the bears are not active in the 1.2048 area in the morning, and the European Central Bank reports from the monetary policy meeting manage to surprise traders with interesting information, then it is best to hold back from short positions until a test of the larger resistance at 1.2084, from which EUR/USD can be sold only if a false breakout is formed. Moving averages that play on the side of the bears also pass there. It is best to open short positions immediately on a rebound from the high of 1.2125, counting on a downward correction of 20-25 points within the day.

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