To open long positions on EURUSD, you need:
In my morning forecast, I paid attention to the support level of 1.1808 and advised to enter the market from it. Let's look at the 5-minute chart and analyze the deals. After several unsuccessful attempts to gain a foothold below 1.1808, the bulls formed a false breakout at this level, which led to a signal to enter long positions. As a result, there was a growth of 20 points to the next resistance level of 1.1830, and the initiative dried up. It was not possible to update the highs of the previous day, which may affect the upward trend of the EUR/USD pair in the second half of the day.
For the second half of the day, the technical picture changed slightly. However, the strategy remained the same. The focus will shift to the results of the Federal Reserve meeting. Most likely, the committee will leave the current monetary policy unchanged, which may lead to a strengthening of the European currency because such a scenario has already been taken into account by the market. If Powell announces the beginning of the curtailment of the asset purchase program in the near future – this will lead to a strengthening of the US dollar. The primary task of the bulls will be to protect the support of 1.1804, which was formed following the results of the morning session. By analogy with the morning entry point, the formation of a false breakout will lead to the formation of a new signal to open long positions. Just above this level, there are also moving averages that play on the side of euro buyers. If there is no bull activity at this level, I advise you to wait for the update of the larger lows of 1.1787 and 1.1771, from where you can buy the pair immediately for a rebound, counting on an upward correction of 15-20 points within the day. In the scenario of EUR/USD growth in the second half of the day, the target of euro buyers will be the resistance of 1.1828. A breakout and consolidation above this range with a test of this area from top to bottom will form a signal to open long positions to continue an upward correction, counting on an increase to 1.1849. The longer-term goal remains the area of 1.1874, where I recommend fixing the profits.
To open short positions on EURUSD, you need:
Although the sellers failed to cope with the task set for them and failed to gain a foothold below the local minimum, they confidently defended the resistance of 1.1830, which transformed into the level of 1.1828. A breakdown of the area of 1.1804 and a reverse test from the bottom up, together with strong data on the US economy, will form an excellent entry point into short positions, counting on the fall of EUR/USD to the intermediate support of 1.1787. A breakdown of this area will also return the pair to larger lows: 1.1771 and 1.1753, where I recommend fixing the profits. If EUR/USD rises during the US session after the publication of the results of the Federal Reserve meeting, the sellers' focus will shift to protecting the resistance at 1.1828. It is best to open short positions when a false breakdown is formed. In the absence of bear activity, I advise you to postpone sales until the test of a larger resistance of 1.1849. However, it is possible to open short positions only after the formation of a false breakdown. It is best to sell the pair immediately for a rebound based on a downward correction of 15-20 points only from the maximum of 1.1874.
In the COT report (Commitment of Traders) for July 20, the market continued to be skewed towards sellers of risky assets. Long positions decreased, and short positions increased, which led to another reduction in the overall positive net position. The meeting of the European Central Bank last week undermined the mood of euro buyers. It became clear to everyone that the regulator will not rush to tighten monetary policy and maintain the program of emergency bond purchases for as long as possible to stimulate inflationary growth to achieve its new goal of 2.0%. In the US, the situation is the opposite. Inflation has long gone beyond the target value, and many representatives of the Federal Reserve point to the need to abandon ultra-soft measures to stimulate the economy in the near future, which plays on the side of the US dollar. And no matter how the US central bank tries to convince investors that this is just a temporary phenomenon, the market continues to abandon risky assets favoring safe-haven assets, which is the US dollar. This week, we will publish the FOMC decision on the main interest rate, which may strengthen the position of the US dollar if the management seriously considers the issue of reducing the bond purchase program in the fall of this year. But the lower the euro falls, the higher the demand for it will be in the medium term since the attractiveness of risky assets will not go anywhere. The COT report indicates that long non-commercial positions decreased from 212 851 to the level of 208 669, while short non-commercial positions increased from the level of 153,138 to 162 847. In addition to the decision of the Federal Reserve System at the end of the week, we are waiting for data on changes in the volume of US GDP for the 2nd quarter of this year, where growth is expected to increase by 8.4% immediately. It can also become a powerful bullish impulse for the US dollar. The total non-commercial net position decreased from the level of 59,713 to the level of 45,822. The weekly closing price fell from the level of 1.1862 to 1.1791.
Signals of indicators:
Trading is conducted around 30 and 50 daily moving averages, which indicates the sideways nature of the market before important data.
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.
A break of the lower limit of the indicator in the area of 1.1804 will increase the pressure on the euro. In case of growth, the upper limit of the indicator in the area of 1.1849 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 specific 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.