To open long positions on EURUSD, you need:
The diverse data on activity in the manufacturing sector of the eurozone countries and unconvincing data on the growth of the service sector maintained a bullish market for the euro. However, if you look at the 5-minute chart, you will see that the pair did not reach any of the levels I indicated in the morning. In this regard, there were no signals for entering the market. Low volatility after the Asian gap may change in the second half of the day after similar data for the United States of America. From a technical point of view, nothing has changed. The initial task of the bulls is to protect the support of 1.1699. Only the formation of a false breakdown there, together with weak data on the activity of the American economy, form an excellent signal for opening long positions in the continuation of the upward correction of the pair. A more important task remains a breakthrough and a reverse test from the top down of the 1.1740 level, which the bulls are currently targeting. This scenario forms a signal to buy the euro with the expectation of recovery to 1.1769, where I recommend fixing the profit. A more distant target will be the 1.1799 area. If EUR/USD declines in the afternoon and there is no activity in the area of 1.1699, I advise you to postpone purchases and wait for the minimum update at 1.1666, which also acts as the lower limit of the current side channel. You can 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 can lose control of the market at any time. Thus, their initial task is to return 1.1699 under control. A breakout and a reverse test of this range will return the pressure on the pair and form a sell signal for the euro in the expectation of updating the minimum of last week - 1.1666. A more distant target will be the area of 1.1628. However, it is unlikely that we can count on such a powerful downward movement today. In the event of a further upward correction during the US session, a false breakdown at the level of 1.1740 forms the first signal to open short positions in the expectation of a return of the bear market. This level also acts as the upper limit of the current wider side channel. Thus, it will not be possible to pass above this level. In the scenario of EUR/USD growth and the absence of bear activity at the level of 1.1740, it is best to postpone sales until the test of a larger resistance of 1.1769. 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 1.1799.
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. It will negatively affect the European currency. Therefore, the only thing left to do is to look at small spikes of volatility within the day – at least this market state 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 above 30 and 50 daily moving averages, which indicates the continuation of the upward correction for the pair.
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
In the case of a decline in the pair, the average border of the indicator in the area of 1.1715 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 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.
