To open long positions on EUR/USD, you need:
Yesterday there was only one signal to buy the euro. Let's take a look at the 5-minute chart and break down the entry points. The levels were not tested in the first half of the day. Accordingly, it was not possible to wait for signals to enter the market. The ultra-low volatility following the release of the US inflation report indicates that many traders have no further guidance to trade as the change in monetary policy from the Federal Reserve and the European Central Bank is unclear. The situation did not change in the second half of the day, but the 1.1729 level was tested - the formation of a false breakout there resulted in creating an entry point into long positions. However, the matter did not result in the euro's sharp growth.
This morning, traders will focus on inflation data in France, as well as on the eurozone's foreign trade balance for June this year. It is unlikely that the indicators will lead to significant changes in volatility in the market, but we can expect that good data will at least slightly strengthen the euro's position and allow the bulls to cope with the resistance of 1.1747, which will be the main focus. Surpassing this area and its reverse test from top to bottom can generate a signal to open long positions with the aim of rising to the level of 1.1766, and then to the high of 1.1787, where I recommend taking profits. A further task will be to update 1.1808, but with such a market we are unlikely to reach it quickly. In case we receive disappointing data on the eurozone, a repetition of yesterday's situation may occur: an important task is to protect the support at 1.1725, just above which is the lower border of the rising correctional channel. Only the formation of a false breakout there, by analogy with yesterday, will lead to an entry point into long positions. In case EUR/USD falls further during the European session and the bulls are not active around 1.1725, I advise you to wait for the update of this month's low around 1.1707, or buy EUR/USD immediately on a rebound from the support of 1.1682, counting on an upward correction of 15-20 points inside day.
To open short positions on EUR/USD, you need:
The bears have not been able to show everything they are capable of. They will focus on protecting the resistance at 1.1747. Weak data on inflation in France and the balance of foreign trade of the eurozone may return pressure to EUR/USD, and forming a false breakout at the level of 1.1747 creates the first signal to open short positions in hopes of a continuation of the bear market, since the bears have already managed to stay in the horizontal channel. A more important task will be the breakthrough and reverse test of the 1.1725 level, which was not done yesterday, although the attempts were very good - there was simply not enough volume and volatility. Only this scenario generates a signal to open new short positions, which will push the pair to this month's low at 1.1707, where I recommend taking profits. The next target will be the 1.1682 area. In case of further upward correction in EUR/USD during the European session and the bulls' are not active at 1.1747, it is best to postpone selling until the test of the larger resistance at 1.1766. You can also open short positions there only after the formation of a false breakout. I recommend selling the pair immediately on a rebound counting on a downward correction of 15-20 points only from a high like 1.1787.
There are no obvious changes in the balance of power in the Commitment of Traders (COT) report for August 3. The absence of important fundamental statistics on the eurozone last week and the summer pause forced traders to take a wait-and-see attitude. The focus was shifted to the US labor market data, which was published late last week, but this COT report does not include its results, so it seems that everything has remained unchanged. In fact, the market movement is acquiring a bearish character again, as the data on the number of employees in the non-agricultural sector of the United States turned out to be much better than the forecasts of economists, which allows counting on an earlier curtailment of the asset purchase program by the Federal Reserve. Representatives of the committee have already started talking about this at the beginning of this week, whose speeches will continue throughout the week. The COT report indicated that long non-commercial positions fell from 202,245 to 199,067, while short non-commercial positions fell from 164,119 to 161,060. We will only receive important fundamental statistics on US inflation by the end of the week, which may seriously affect the direction of the EUR/USD pair, but on condition that the data diverge from the forecasts of economists. Many expect inflation to slow down. If this happens, the euro will regain its position. If the data indicate continued rapid growth in CPI, the US dollar continued to strengthen its positions against the European currency. At the end of the week, the total non-commercial net position decreased from 38,126 to 38,007. The weekly closing price increased from 1.1804 to 1.1874.
Indicator signals:
Trading is carried out in the area of 30 and 50 moving averages, which indicates the sideways nature of the market.
Moving averages
Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differs from the general definition of the classic daily moving averages on the daily D1 chart.
Bollinger Bands
Volatility is very low, which does not provide signals to enter the market.
Description of indicators
- Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
- Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
- MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
- Bollinger Bands (Bollinger Bands). Period 20
- Non-commercial 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 short and long positions of non-commercial traders.
