To open long positions on EURUSD, you need:
In my morning review, I paid attention to the level of 1.1757 and recommended making decisions from it. Let's look at the 5-minute chart and talk about what happened. After the data on Germany, it is visible that euro buyers make another unsuccessful attempt to break above the resistance of 1.1757, which leads to the formation of a false breakdown and a signal to open short positions. When preparing the forecast for the second half of the day, the downward movement was about 22 points, and the pressure on the euro remains. From a technical point of view, nothing much has changed. The focus of the bulls will now be shifted to data on changes in the volume of orders for long-term goods. However, they are unlikely to play on the side of euro buyers. Therefore, only weak fundamental statistics will keep the pair in the side channel. The primary task of the bulls remains to protect the support of 1.1728, to which the pair came close to the beginning of American trading. The formation of a false breakdown forms an excellent signal to open long positions in the continuation of the upward correction of the pair. Just above this level, the lower border of the ascending correction channel formed on August 20 passes. A more important task for the bulls will be a breakthrough and a reverse test from the top down of the weekly high of 1.1757, which they failed to do in the first half of the day. This option forms a buy signal to restore to 1.1783, where I recommend fixing the profits. A more distant target will be the area of 1.1804. In the scenario of a decline in EUR/USD and a lack of activity in 1.1728, I advise you to postpone purchases and wait for the update of the minimum at 1.1697. You can buy EUR/USD immediately for a rebound from the support of 1.1666, 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 and once again rebuffed euro buyers in the resistance area of 1.1757. Strong data on the change in the volume of orders for long-term goods in the US in the second half of the day will push the euro to the support of 1.1728. A breakthrough and a reverse test of this range will return pressure on the pair and form a signal to sell the euro to update the minimum of last week - 1.1697. The area of 1.1666 will be a more distant target. However, one can hardly count on such a powerful downward movement today. In the case of a repeated upward correction of the pair during the American session, the formation of a false breakdown at the level of 1.1757 forms another signal to open short positions in the expectation of a return of the bear market. In the scenario of a lack of activity at the level of 1.1757, it is best to postpone sales until the test of a larger resistance of 1.1783. 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 1.1804.
The COT report (Commitment of Traders) for August 17 showed a clear increase in traders' interest in the market, as long positions grew quite seriously. However, short positions remained almost unchanged, indicating that buyers of risky assets are feeling the bottom. The data on eurozone GDP and inflation released last week fully coincided with the forecasts of economists, which is generally not bad since everything is going according to the expectations and plans of the European Central Bank. The situation changed in the direction of buyers after the publication of the minutes of the meeting of the Federal Reserve System of the United States of America, where the members of the committee's views on future policy were divided – this supported risky assets and led to a stop of the downtrend for the pair. The lack of guidance due to the new strain of Delta coronavirus and the incomprehensible reaction of the European economy forces the European Central Bank to continue to adhere to a wait-and-see position and maintain a stimulating policy at current levels, which limits the upward potential of the pair. The COT report indicates that long non-commercial positions increased from the level of 212 809 to the level of 233 529, while short non-commercial positions decreased from the level of 178 952 to 175 889. At the end of the week, the total non-commercial net position increased from the level of 33,857 to the level of 57,640. The weekly closing price also rose from 1.1736 and 1.1777.
Signals of indicators:
Moving averages
Trading is conducted in the area of 30 and 50 daily moving averages, which indicates the lateral nature of the market.
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 break of the lower limit of the indicator in the area of 1.1730 will increase pressure on the euro and lead to a larger downward correction of the pair. In case of growth, the upper limit of the indicator in the area of 1.1760 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.
