To open long positions on EURUSD, you need:
The euro slipped down after weak data on activity in the services sector of the eurozone countries. Well, as weak - there was just a slight decrease from the peak values of the previous months when the countries' economies were fully recovering from the coronavirus pandemic. Data on retail sales in the eurozone added fuel to the fire, as they were worse than economists' expectations. As a result, no signals have been formed for the pair to enter the market yet. The 5-minute chart shows how the bears went beyond the level of 1.1855, but then the buyers quickly compensated for these losses, returning them under their control. We had to revise the technical picture in the second half of the day, as the market still lacks volatility and volume. Similar data on the US economy may strengthen the position of the US dollar. However, given that activity is slowing in many countries, the American service sector will likely also show a slight decline in growth. If so, then the bulls can count on the formation of a false breakdown in the new support area of 1.1844, which will lead to the formation of a signal to open long positions. But the more important task of buyers, which will lead to a reversal of the bearish correction, will be to consolidate at the level of 1.1879. The reverse test of this area from top to bottom forms a signal to open long positions with the expectation of continuing the uptrend to the maximum of 1.1908, where I recommend fixing the profits. Given how weak the euro has been trading recently, it is unlikely that it will be possible to count on a breakdown of this range within the day. If this happens, the test of 1.1908 from the top down will form an additional entry point for purchases, which will lead EUR/USD to new local levels of 1.1937 and 1.1984. If the bulls are unable to offer anything in the support area of 1.1844, it is best to postpone long positions until the next low of 1.1822, from which you can buy the pair immediately for a rebound in the expectation of an upward rebound of 15-20 points within the day. The next major support is seen in the area of 1.1799.
To open short positions on EURUSD, you need:
Sellers coped with the task assigned to them. However, they failed to catch on to the support of 1.1855. Good data on the US economy, the release of which is scheduled for the second half of the day, will help in this. But given that the statistics may not be the best, trading in a narrow side channel will continue further. The bears' focus will be on the pair's decline to today's minimum in the area of 1.1844. Before selling, I advise you to wait for the update of this level from the bottom up and only then open short positions to reduce the euro to a larger minimum of 1.1822, where I advise you to fix the profit. A more distant target will be the area of 1.1799. However, this is not with such volatility as today. In the case of EUR/USD growth during the US session, I advise you to look at the resistance of 1.1879, but you can open short positions from there only if a false breakdown is formed. I advise you to sell the pair immediately for a rebound based on a downward correction of 15-20 points only from the level of 1.1908.
In the COT report (Commitment of Traders) for July 27, the market continued to be skewed towards sellers of risky assets. Long positions decreased, and short positions increased, which led to another decrease in the overall positive net position. The results of the Federal Reserve meeting indirectly affected the direction of the euro. However, given the wait-and-see position of the committee, fewer people were willing to buy the US dollar. The data on US GDP and the eurozone were quite different: in the US, the report fell short of economists' forecasts, and in the eurozone, on the contrary – the indicator turned out to be better than forecasts, which led to the growth of the euro. However, this fact is no longer taken into account in the current COT report. Thus, it seems that the balance of power remains on the side of the bears. The COT report indicates that long non-commercial positions decreased from the level of 208,669 to 202,245, while short non-commercial positions increased from 162,847 to the level of 164,119. Only at the end of this week, we are waiting for important fundamental statistics on the change in the number of people employed in the non-agricultural sector of the United States of America, which can significantly affect the direction of the EURUSD pair. Good data will become a powerful bullish impulse for the US dollar, which will strengthen its position as the Federal Reserve System continues to refer to the weak pace of labor market recovery in its forecasts. The total non-commercial net position decreased from the level of 45,822 to the level of 38,126. But the weekly closing price rose slightly from the level of 1.1791 to 1.1804.
Signals of indicators:
Moving averages
Trading is already below the 30 and 50 daily moving averages, which indicates the sideways nature of the market with a minimal advantage of sellers.
Note: The author considers the period and prices of moving averages 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, the upper limit of the indicator in the area of 1.1880 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.
