To open long positions on EUR/USD, you need:
Quite a lot of signals were formed to enter the market at the 1.1784 level yesterday afternoon. This indicates a rather active opposition of buyers and sellers of this range, which the latter won. Let's take a look at the 5 minute chart and break down the trades. The pair fell to this range after forming a false breakout at the 1.1784 level, and so another buy signal was generated, which brought about 20 points of profit. Then the bears broke through the area below 1.1784 and even settled below this level, forming an entry point into short positions, which brought losses. The bulls regained the initiative and tried to keep support of 1.1784 towards the middle of the US session, generating a buy signal, which brought about 20 points. After gradually falling and settling below the 1.1784 level, the pair actively declined today in the Asian session. As for the current technical picture of the pair, the situation is rather precarious. Bulls need to quickly regain the 1.1791 level, consolidating at which forms a good entry point into long positions in the hope of returning to the resistance of 1.1825. However, we will aim for a high of 1.1863 as the long term target, which is where I recommend taking profits. An equally important task for the bulls is to protect the support of 1.1756, which is the bulls' last hope to keep the market under their control. Forming a false breakout on it will be a signal to enter long positions. Otherwise, it is best to postpone longs until a new low of 1.1714 has been updated, or open long positions immediately on a rebound from the support of 1.1648, counting on a correction of 30-40 points within the day.
Let me remind you that the Commitment of Traders (COT) reports for September 1 showed a decrease in long non-commercial positions from 262,061 to 250,867, while short non-commercial positions increased from 50,309 to 54,130. The euro rose to new annual highs and the bulls inability to break through the area above the 20th figure, which we clearly saw at the beginning of this month, led to a sharp closure of long positions and profit taking by traders and also a build-up of short ones. As a result, the positive non-commercial net position slightly decreased and reached 196,747, against 211,752 a week earlier. However, traders will see any major decline in the euro as a good level to build up long positions in the medium term.
To open short positions on EUR/USD, you need:
No important fundamental data today and everyone is preparing for tomorrow's European Central Bank monetary policy meeting. Bears need to protect resistance at 1.1791, where a false breakout will be a signal to open short positions in hopes to continue the euro's decline. The main target will be a breakout and settling below the support level of 1.1756, which will create an additional signal to sell EUR/USD and cause the pair to fall to a low of 1.1714, which is where I recommend taking profits. A low of 1.1648 will be the long term target, which can only be reached after tomorrow's ECB meeting. In case sellers are not active in the support area of 1.1791, I recommend postponing short positions until the high of 1.1825 has been tested, or sell the euro immediately on a rebound from a larger resistance of 1.1863, counting on a correction of 20-30 points within the day.
Indicator signals:
Moving averages
Trading is carried out just below 30 and 50 moving averages, which indicates a higher likelihood of the euro's fall.
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 D1 daily chart.
Bollinger Bands
A breakout of the lower border of the indicator around 1.1756 will increase pressure on the euro. A breakout of the upper border of the indicator in the 1.1800 area will lead to a larger rise in the pair.
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.
