To open long positions on EUR/USD, you need:
Yesterday, there was only one signal that was formed for entering the market in the second half of the day. Let's take a look at the 5 minute chart and break it down. Nothing interesting happened in the morning. It is clearly seen that against the background of low volatility, even after the release of a number of fundamental reports for the eurozone, no activity on the part of bulls and bears was observed. In the afternoon, the bulls managed to defend the support at 1.1755 and formed a long entry point there. However, the pair did not show a particularly active upward recovery from this level.
No important fundamental statistics for the euro area this morning, so the pair will continue to trade in a narrow horizontal channel with the prospect of reaching new weekly highs. The market is under the control of the bulls. The upside potential in EUR/USD may well remain as the focus shifts this afternoon to Federal Reserve Chairman Jerome Powell's speech at Jackson Hall. Predicting the pair's direction during Powell's speech will be very difficult, so it is best to navigate through the statements made. As for the technical picture for the European session: the primary task of the bulls is to protect the support at 1.1745. Only the formation of a false breakout there creates a good signal to open long positions in continuation of the upward trend with the key goal of reaching a high like 1.1766. The more important task of the bulls will be the breakout and reverse test from top to bottom of this level, which also creates a buy signal with the aim of retracing to 1.1784, where I recommend taking profits. The next target will be the area of 1.1801, but this level will be available only after Powell's speech and if an upward trend forms. The 1.1801 update will be evidence of continuing the upward trend. In case EUR/USD falls in the first half of the day and it is not active in the 1.1745 area, I advise you to postpone long positions and wait for the renewal of the low at 1.1727, which a few days ago once again helped out bulls of the European currency. It is possible to open long positions in EUR/USD immediately on a rebound from the support of 1.1697, counting on an upward correction of 15-20 points within the day.
To open short positions on EUR/USD, you need:
Although the bears tried to fight back the bulls yesterday, however, during the US session, we did not see a major sale during Powell's speech. Low volatility will continue today and beyond. The initial task of the bears during the European session is to regain control of the 1.1745 level. Only a breakthrough and reverse test of this range will return pressure to the pair and generate a signal to sell the euro in order to renew the low at 1.1727. The next target will be the area of 1.1697, but today we can count on such a powerful downward movement only after Powell's speech in Jackson Hole. In case EUR/USD grows further during the European session, only the formation of a false breakout at the level of 1.1766 can create the first signal to open short positions in hopes of restoring the bear market. In case it is not active at 1.1766, it is best to postpone selling until the test of the larger resistance at 1.1784. I recommend selling the pair immediately on a rebound counting on a downward correction of 15-20 points only from a high like 1.1801.
I recommend that you familiarize yourself with:
The Commitment of Traders (COT) report for August 17 showed that there is a clear increase in traders' interest in the market, since long positions have sharply grown, but short positions have remained practically unchanged, which may indicate that buyers of risky assets are feeling the low. Eurozone GDP and inflation data released last week were in full agreement with economists' forecasts, which is generally not bad, as everything is going according to the expectations and plans of the European Central Bank. The situation towards the bulls changed when the Federal Reserve's minutes was published, where the members of the committee members' views on the future policy were divided - this supported risky assets and caused the pair's downward trend to come to a stop. The lack of benchmarks due to the new strain of the Delta coronavirus and the incomprehensible reaction of the European economy to it in the fall - all this forces the ECB to continue to adhere to a wait-and-see attitude and maintain a stimulating policy at current levels, which limits the pair's upward potential. The COT report indicated that long non-commercial positions rose from 212,809 to 233,529, while short non-commercial positions fell from 178,952 to 175,889. By the end of the week, the total non-commercial net position increased from 33,857 to 57 640. The weekly closing price also rose from 1.1736 and 1.1777.
Indicator signals:
Moving averages
Trading is carried out in the area of 30 and 50 moving averages, which indicates the sideways nature of the market.
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
Surpassing the upper border of the indicator in the area of 1.1770 will lead to a new wave of euro growth. In case of a decline, support will be provided by the lower border of the indicator in the area of 1.1745.
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.
