To open long positions on EURUSD, you need to:
Given the fact that poor data came out on the index of sentiment in the business environment of the Eurozone, it is not surprising that the European currency resumed its decline in pair with the US dollar. The bears managed to pick up another support level of 1.1797. If you look at the 5-minute chart, you will see how the breakout and consolidation below the support of 1.1797 formed a signal to sell the European currency, however, a major drop down has not yet occurred, so be very careful, as the signal may not be implemented.
In the second half of the day, buyers will focus on returning to the level of 1.1797, and if this happens, I recommend leaving short positions. However, you don't need to rush to buy EUR/USD. Only a confident top-down test of the 1.1797 area forms a convenient entry point for long positions, counting on the resumption of euro growth and a return to the large resistance of 1.1860, just below which the moving averages play on the sellers' side. The longer-term goal will be a maximum of 1.1915, where I recommend fixing the profits. A test of this range will also indicate a resumption of the bull market. If there is no active growth during the next update from the bottom up of the resistance of 1.1797, and closer to the opening of the North American session, the pressure on EUR/USD returns, it is best to postpone long positions until the support update of 1.1743, where you can buy the euro immediately for a rebound in the expectation of a correction of 15-20 points within the day.
To open short positions on EURUSD, you need to:
Sellers need to defend the resistance of 1.1797, which they managed to win back today in the first half of the day against the background of weak reports on the Eurozone economy. In the case of a test of this level from the bottom up and unsuccessful consolidation of buyers on it, I recommend increasing short positions in the continuation of the downward trend. The nearest target of the bears in this case will be 1.1743. A test of this level will indicate the actual formation of a new bear market for EUR / USD. A break in this area will increase the pressure on the pair and quickly push it to a minimum of 1.1701, where I recommend taking the profit. If the bulls are stronger and manage to regain the 1.1797 area, then it is best to exit the morning sales and postpone new short positions until the 1.1860 resistance is updated. I recommend selling EUR/USD immediately for a rebound from the maximum of 1.1915, based on a correction of 15-20 points within the day.
Let me remind you that the COT report (Commitment of Traders) for November 3 recorded a reduction in long positions and an increase in short positions. But despite this, buyers of risky assets believe in the continuation of the bull market, although they prefer to act cautiously. Thus, long non-profit positions decreased from 217,443 to 208,237, while short non-profit positions rose to 67,888 from 61,888. The total non-commercial net position fell to 140,349 from 155,555 a week earlier. It is worth noting that bullish sentiment on the euro in the medium term remains quite high, especially after the victory of Joe Biden, who intends to give the American economy the next largest monetary aid package in the amount of more than 2 trillion US dollars.
Signals of indicators:
Moving averages
Trading is below 30 and 50 daily moving averages, which indicates a further decline in the euro.
Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
Bollinger Bands
If the pair grows in the second half of the day, the upper limit of the indicator in the area of 1.1845 will act as a resistance.
Description of indicators
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
- MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
- Bollinger Bands (Bollinger Bands). Period 20
- Non-profit 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 the short and long positions of non-commercial traders.
