To open long positions on EURUSD, you need to:
In my morning forecast, I paid attention to the level of 1.2102 and recommended buying euros from it. Let's look at the 5-minute chart and analyze the entry point. Good data on business sentiment in Germany and the eurozone led to a breakout and consolidation above the resistance of 1.2102, and the reverse test of this level from top to bottom, which I highlighted on the chart, led to the formation of a simply excellent entry point into long positions to grow EUR/USD in the resistance area of 1.2142, to which we are 10 points short. From the morning entry point, the euro has already risen by more than 30 points.
Now, buyers of the euro will focus all their attention on the level of 1.2142, as when it is updated, it will be possible to observe some pause in the upward correction, which may lead to a decrease in EUR/USD in the second half of the day. Only a breakout and consolidation above the level of 1.2142, by analogy with the purchase, which I analyzed a little higher, forms an additional signal to open long positions already to update the new maximum of 1.2179, where I recommend fixing the profits. It is also important to pay attention to the level of 1.2142, as there is the upper limit of the descending price channel formed on January 7 of this year. A breakthrough in this area will lead to a change in the trend. In the scenario of a decline in the euro during the US session, it is best to consider buying only after the formation of a false breakout in the support area of 1.2102. I recommend opening long positions immediately for a rebound from the minimum of 1.2064, based on an upward correction of 20-25 points within the day.
To open short positions on EURUSD, you need to:
Sellers of the euro will focus on the return of EUR/USD under the support level of 1.2102, which they missed in the first half of the day. However, before thinking about this level, it is necessary to protect the resistance of 1.2142, which the bulls came close to in the middle of the European session. Only the formation of a false breakout will form a good entry point into short positions, which will lead to a decline and a test of support of 1.2102. It will be possible to talk about the return of control by bears over the market only after a breakout and consolidation below this level, the test of which on the reverse side will quickly dump the euro at a minimum of 1.2064, where I recommend fixing the profits. If after updating the level of 1.2142, we do not see particularly active sales of the euro, then I advise you to take your time and wait for the update of the next local maximum of 1.2179, where you can open short positions immediately for a rebound in the expectation of a downward correction of 20-30 points within the day.
Let me remind you that the COT report (Commitment of Traders) for January 12 recorded a sharp increase in long positions and a reduction in short ones. Buyers of risky assets continue to believe in a bullish trend, especially after such a large decline in the euro earlier this year, which allows new major players to enter the market. In Europe, vaccination against the first strain of coronavirus continues, which leads to the appearance of new euro buyers on the market. The likely approval of another $ 1.9 trillion aid plan for the US economy is likely to further erode the US dollar's position. The risk of extending quarantine measures in February this year, both in Germany and in several other European countries, is a deterrent to the growth of the euro. Thus, long non-commercial positions increased from 224,832 to 228,757, while short non-commercial positions fell from 81,841 to 72,867. Due to the sharp drop in short positions, the total non-commercial net position increased to 155,890 from 143,902 a week earlier.
Signals of indicators:
Moving averages
Trading is conducted above 30 and 50 daily moving averages, which indicates the resumption of the upward correction for 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
In case of a decline, the average border of the indicator around 1.2095 will provide support.
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.
