To open long positions on EURUSD, you need:
In my morning forecast, I paid attention to the level of 1.1686 and recommended making decisions from it. Let's look at the 5-minute chart and analyze the entry points. The breakthrough of 1.1686 in the first half of the day occurred without a reverse test of this level, so there was no entry point for sale. Then the buyers managed to rehabilitate themselves quickly and returned 1.1686 back under their control. The reverse test of this area then led to the formation of a signal to open long positions, which continues to work out at the time of writing the article. The focus of the bulls in the second half of the day will be shifted to data on the US labor market. Suppose they disappoint traders and turn out to be worse than economists' forecasts. In that case, we can expect the recovery of the European currency to a large resistance of 1.1715, in the area in which the moving averages are playing on the side of bears. The return of this resistance under control with a top-down test forms a signal to buy the euro in the hope of recovering to a larger maximum of 1.1741. The main sale of the pair occurred yesterday during the publication of the Federal Reserve minutes. A break in this area can also provoke an upward correction already to the area of 1.1769, where I recommend fixing the profits. In the scenario of a return of pressure on EUR/USD in the second half, a serious task for the bulls will be to protect the support of 1.1682 since it is highly desirable to release the pair below this range. When a false breakdown is formed, you can open long positions. In the scenario of a decline in EUR/USD and the absence of bull activity in the area of 1.1682, I advise you to wait for the update of the minimum at 1.1656 or buy EUR/USD immediately for a rebound from the support of 1.1628, counting on an upward correction of 15-20 points within the day.
To open short positions on EURUSD, you need:
Sellers keep the market under their control. Therefore, the main focus will be shifted to this range. Its breakout and test from the bottom-up form a good entry point into short positions in the continuation of the bear market with the main goal of updating the lows of 1.1656 and 1.1628, where I recommend fixing the profits. A more distant target will be the area of 1.1604. We can expect the euro to fall in the case of strong data on the US labor market, which was discussed so much yesterday in the minutes of the Federal Reserve System. Suppose the upward correction of the euro continues. In that case, the formation of a false breakdown at the level of 1.1715 forms a signal to open short positions in the expectation of a return of the bear market. Under the scenario of EUR/USD growth during the US session and the absence of bull activity at the level of 1.1715, it is best to postpone sales until the test of a larger resistance of 1.1741. It is also possible to open short positions only after the formation of a false breakdown. I advise you to sell the pair immediately for a rebound based on a downward correction of 15-20 points only from the maximum of 1.1769.
The COT report (Commitment of Traders) for August 10 showed a clear increase in traders' interest in the market, as both long and short positions increased. However, the latter turned out to be more, which led to a reduction in the positive delta. Last week, many traders focused on the consumer price index of the United States of America, which slowed down after record growth rates and coincided with economists' forecasts. It seriously affected the desire of traders to buy the US dollar in the expectation of imminent changes in the bank's monetary policy. Given such inflationary jumps, we can expect that the Federal Reserve System will slow down with changes in the bond purchase program, which many investors were counting on in September of this year. Accordingly, this will weaken the position of the US dollar. But do not think that against this background, the euro will go up sharply. The lack of guidance due to the new strain of Delta coronavirus and the incomprehensible reaction of the European economy will force the European Central Bank to continue to adhere to a wait-and-see position and maintain a stimulating policy at current levels that negatively affect the European currency. Therefore, the only thing left to do is to look at small bursts of volatility within the day – at least this state of the market will be until the autumn of this year. The COT report indicates that long non-commercial positions increased from the level of 199,067 to 212,809, while short non-commercial positions jumped from the level of 161,060 to the level of 178,952. At the end of the week, the total non-commercial net position decreased from the level of 38,007 to the level of 33,857. The weekly closing price also fell from 1.1874 to 1.1736.
Signals of indicators:
Moving averages
Trading is conducted below 30 and 50 daily moving averages, which indicates the bearish nature of the market in the short term.
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
A breakthrough of the upper limit of the indicator in the area of 1.1715 will lead to a new wave of euro growth. A break of the lower limit of the indicator in the area of 1.1665 will increase the pressure on 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 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.
