To open long positions on EUR/USD, you need:
A signal for selling the euro appeared since volatility was rather low yesterday afternoon. Let's take a look at the 5-minute chart and break it down. Good data on ISM for the US non-manufacturing sector caused the dollar to strengthen and a false breakout to form at the 1.1651 level, from which I recommended opening short positions. However, given the low volatility, the downward movement was no more than 25 points, afterwards the bulls again began to pull themselves into the market, maintaining equilibrium on it.
Buyers of the euro can only count on Joe Biden's victory in the presidential elections, since the pressure on the US dollar will significantly rise in this case. From a technical point of view, nothing has changed in the market. The nearest support and resistance levels only slightly moved. Buyers of the European currency have the task of regaining control of the resistance of 1.1663, which the bulls tried to do several times yesterday but to no avail. Getting the pair to settle above the 1.1663 level and testing it from top to bottom will be a signal to open long positions in sustaining recovery to the 1.1701 resistance area, where you can watch the pair come to a halt. Testing 1.1701 will result in forming a horizontal channel and stop the bearish trend before the publication of the US election results. If the bulls rise above 1.1701, the bulls will aim for a high of 1.1754, where I recommend taking profits. If the pressure on the euro persists, and volatility will most likely be quite low today, I recommend buying EUR/USD only if it is falsely broken at the 1.1623 level. In case of a breakout of this area against the background of Donald Trump's victory, I recommend postponing long positions until we test the next low in the 1.1585 area, or even lower, to the 1.1541 area, counting on a 15-20 point correction within the day.
The Commitment of Traders (COT) report for October 27 showed a reduction in both long and short positions. Despite this, buyers of risky assets believe that the bull market will continue and so they prefer to act with caution. Thus, long non-commercial positions fell from 229,878 to 217,443, while short non-commercial positions also fell to 61,888 from 63,935. The total non-commercial net position decreased to 155,555 from 165,943 a week earlier. However, the bullish sentiments for the euro remains rather high in the medium term. The more the euro will decline against the US dollar at the end of this year, the more attractive it will be for new investors, especially following the US presidential elections, when additional pressure on the market on this issue eases.
To open short positions on EUR/USD, you need:
Sellers need to form the next false breakout in the resistance area of 1.1663, similar to yesterday, which will be a new signal to open short positions in continuing the emerging downward trend. The first target in this scenario will be the low of 1.1623, however, I recommend taking profit only after the pair reaches support at 1.1585. The confident victory of Donald Trump will lead to a new wave of EUR/USD decline already in the area of lows of 1.1641 and 1.1490. If the market continues to remain in a horizontal channel, and the election results do not provide any specific details, the lack of active actions of sellers in the resistance area of 1.1662 may cause the pair to rise. Therefore, it is best to postpone sell positions until the test of Friday's high of 1.1701, or open short positions immediately on the rebound from the resistance of 1.1754, counting on a correction of 15-20 points within the day. Quite low volatility is expected in the first half of the day and the pair will remain in a horizontal channel.
Indicator signals:
Moving averages
Trading is carried out in the area of 30 and 50 moving averages, which indicates the sideways nature of the market ahead of important events.
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
Volatility is low, which does not provide signals to enter the market.
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.
