To open long positions on EUR/USD, you need:
I paid attention to buy positions from 1.1749 yesterday morning. Look at the 5-minute chart: it shows a classic breakout followed by a consolidation and a test of this range from top to bottom, which forms a good entry point to the market. In our case, there were long positions. The movement was around 25 points, but a larger upward movement did not take place. The situation in the market did not change at all when the Federal Reserve minutes was released, but the euro did pause. Further direction will depend on going beyond the horizontal channel.
However, as long as trading is carried out above 1.1749, we can expect the euro to move to the resistance area of 1.1796, where I recommend taking profits, it will not be so easy to go beyond this range. The focus in the morning will shift to the publication of the minutes of the European Central Bank, therefore, a breakout and consolidation above 1.1796, similar to yesterday's entry from 1.1749, generates a signal to open long positions in order for EUR/USD to strengthen and also test the high at 1.1833, where you can also exit the market. The high at 1.1868 will still be a distant target. If the euro is under pressure again, then forming a false breakout at 1.1749 will be another signal to open long positions in anticipation of continuing the upward correction in EUR/USD. If the pair drops below 1.1749, as there is a high probability that a reluctance to buy will attract new sellers, then it is better not to rush with long positions. The optimal scenario would be to wait until major support at 1.1701 has been updated and open long positions from there immediately for a rebound, counting on a correction at 20-30 points.
The Commitment of Traders (COT) report for September 29 recorded a reduction in both long and short positions, which led to a decrease in the delta. Apparently, the lack of guidelines and a surge in the incidence of coronavirus in Europe discouraged major players from building up long positions in the euro, but no one is in a hurry to buy the US dollar either because of the upcoming presidential elections in the United States. Thus, long non-commercial positions decreased from 247,049 to 241,967, while short non-commercial positions decreased from 56,227 to 53,851. The total non-commercial net position also decreased to 188,116, against 190,822 a week earlier. which implies that new players are taking a wait-and-see approach, however, bullish sentiments for the euro remain rather high in the medium term. The more the euro falls against the US dollar, the more attractive it is for new investors.
To open short positions on EUR/USD, you need:
US President Donald Trump eased his stance on the new package yesterday, which put pressure on the dollar and restored demand for the euro. Sellers are now focusing on protecting resistance at 1.1796. You can also sell from this level, similar to yesterday, after a false breakout appears there. But a more important goal is to return support at 1.1749. Settling below this level will form a larger entry point to short positions and return the market to the sellers' side, allowing them to reach the 1.1701 area, where I recommend taking profits. The 1.1656 area will be a distant target. The publication of the minutes of the European Central Bank, which is scheduled for the first half of the day, may put another pressure on the euro. If the bulls reach a breakout of resistance at 1.1796, then it is best not to rush to sell, but to wait until it grows to a new high of 1.1833, or sell the euro immediately on a rebound from the resistance of 1.1868, counting on a correction of 20-30 points within the day.
Indicator signals:
Moving averages
Trading is carried out in the area of 30 and 50 moving averages, which indicates market uncertainty with the succeeding direction.
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
Volatility has significantly dropped, which does not provide signals to enter the market based on the indicator.
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.
