To open long positions on EURUSD, you need:
In my morning forecast, I paid attention to sales from the level of 1.2111 when it breaks and consolidates below. However, if you look at the 5-minute chart, you will see that the breakout of 1.2111 took place, but there was no reverse convenient test of this level from the bottom up, which would form a good sell signal. The euro's downward movement was entirely based on statements related to the progress of negotiations on a trade agreement between the UK and the EU, where there is no progress.
In the second half of the day, buyers of the European currency need to try hard to return the resistance of 1.2111, which they have already come close to. The test of this level is still upward and its retention is played on the side of the euro sellers. Therefore, only a break and consolidation above 1.2111 with its update from top to bottom forms a good signal to open long positions. The main target will be to return to last week's maximum of 1.2175, which has already been tested twice for strength. The third update of this level will likely lead to its breakout and continuation of the upward trend in the area of 1.2255 and 1.2339, where I recommend fixing the profits. If there is no bull activity in the area of 1.2111 and the next wave of decline in the euro, it is best not to rush to buy, but wait for the release of data on lending in the United States, as well as updating the minimum of 1.2046. From this level, you can buy euros for a rebound based on a correction of 20-25 points within the day. A larger support level is seen around 1.1986. A test of this low will lead to a reversal of the upward trend in the short term.
To open short positions on EURUSD, you need to:
Bad news on Brexit allowed sellers of the euro to achieve a breakdown of the level of 1.2111, under which the bears are now trying to gain a foothold. The formation of a false breakout in the second half of the day after the US data may lead to the formation of an excellent entry point for short positions in the continuation of the downward correction to the area of the minimum 1.2046, where I recommend fixing the profits. Fixing below this level with a test of it from the bottom up will be a good signal to sell EUR/USD to the area of a large minimum of 1.1986, and the longer-term goal of the bears will be to close the support area of 1.1923, which will seriously affect the upward trend. In case of recovery of EUR/USD in the second half of the day and a breakout of the resistance of 1.2111, it is better not to rush to sell. In this scenario, you can only count on short positions from the resistance of 1.2175 or sell EUR/USD from a new high in the area of 1.2255 with the aim of a downward correction of 15-20 points within the day.
Let me remind you that the COT report (Commitment of Traders) for December 1 recorded an increase in long and a reduction in short positions. Buyers of risky assets believe in the continuation of the bull market, and in the further growth of the euro after breaking the psychological mark in the area of the 20th figure. For example, long non-profit positions rose from 206,354 to 207,302, while short non-profit positions fell to 67,407 from 68,104. The total non-profit net position rose to 139,894 from 138,250 a week earlier. It is worth paying attention to the growth of the delta, observed for the second week in a row, after its 8-week decline, which indicates a clear advantage for buyers and a possible resumption of the medium-term upward trend for the euro. It will be possible to talk about a larger recovery only after European leaders agree with the UK on a new trade agreement. However, we did not get any good news last week, and we have an EU summit ahead of us, which will put the final point in this story. The euro will be supported by news about the lifting of restrictive measures for the Christmas holidays, as well as the absence of major changes in the monetary policy of the European Central Bank.
Signals of indicators:
Moving averages
Trading is conducted below 30 and 50 daily moving averages, which indicates the corrective nature of the market.
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 classic daily moving averages on the daily chart D1.
Bollinger Bands
If the euro rises in the second half of the day, only a break of the upper limit of the indicator in the area of 1.2160 will lead to a new upward trend of the pair.
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.
