To open long positions on EURUSD, you need:
In the first half of the day, sellers of the European currency did everything to protect the resistance of 1.1846, but this was not enough. Let's look at the 5-minute chart and talk about what happened. After forming a false breakdown at the level of 1.1846, it was expected that the pressure on the euro would increase, and we would see a good movement of the pair down, which was so lacking yesterday. However, the buyers had completely different plans. After some "smearing" of the level of 1.1846, the pair continued its slow upward march with the expectation of updating the maximum of 1.1870. From a technical point of view, the levels have only changed, and the strategy has remained the same. At the end of the first half of the day, support was formed at 1.1844, which the bulls will put all their strength to protect today in the event of a decline in the euro during the American session. The formation of a false breakdown forms an excellent signal to open long positions in the continuation of the upward trend with the key goal of reaching a maximum of 1.1870, which will lead to an update of the local resistance and the preservation of the upward trend by the euro buyers. An important task will be a breakthrough and a reverse test from top to bottom of the level of 1.1870, which will form a buy signal to recover to new highs of 1.1898 and 1.1937, where I recommend fixing the profits. In the case of a larger upward trend, the farthest target for today will be the area of 1.1984. It will be possible to reach this level only in the case of very weak reports on the US labor market and statements by the Federal Reserve System representatives about maintaining the previous course of monetary policy for a long time. In the scenario of the absence of bull activity in the area of 1.1844, I advise you to open long positions in EUR/USD only after updating the minimum of 1.1821, just above which the moving averages are playing on the buyers' side. You can buy the pair immediately for a rebound only from the support of 1.1797, or even lower - from the level of 1.1769, counting on an upward correction of 15-20 points within the day.
To open short positions on EURUSD, you need:
Sellers of the euro do not have enough "spirit" after yesterday's statements by the European Central Bank representatives that it is time to think about curtailing measures to support the economy. The primary task will be to protect the resistance of 1.1870, which buyers are currently targeting. The formation of a false breakdown can lead to the formation of a signal to open short positions with the initial goal of reducing to the area of the morning support of 1.1844. The next task of the bears during the American session will be to return this level under control. Its breakthrough and a reverse test from the bottom up with strong indicators on the US labor market will return pressure on the pair and form a signal to sell the euro with an update to the minimum of 1.1821. A more distant target will be the area of 1.1797. However, such a powerful downward movement can be counted on today only after the speeches of the Federal Reserve System representatives. In case of further growth of EUR/USD in the second half of the day and lack of activity at 1.1870, it is best to postpone sales until the test of a larger resistance of 1.1898. 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 1.1937.
The COT report (Commitment of Traders) for August 24 recorded a clear reduction in long positions and only a slight decrease in short ones. All this was before an important speech by the US Federal Reserve System chairman in Jackson Hole. Many traders were afraid that he would announce more active central bank actions to reduce the bond purchase program, so they tried to get rid of risky long positions on the euro. However, this did not happen, and at the end of the week, the euro took a course towards the north, updating local highs. However, the demand for such assets is limited due to the lack of benchmarks caused by the relatively high probability of another wave of coronavirus spread and its new Delta strain. All this will force the European Central Bank to continue to adhere to a wait-and-see position and maintain a stimulating policy at current levels, limiting the pair's upward potential. The COT report indicates that long non-commercial positions decreased from 233,529 to the level of 194,169, while short non-commercial positions decreased from the level of 175,889 to the level of 169,539. At the end of the week, the total non-commercial net position fell immediately to 24,630 from the level of 57,640. The weekly closing price also fell from 1.1777 to 1.1744.
Signals of indicators:
Moving averages
Trading is conducted above 30 and 50 daily moving averages, which indicates the desperate attempts of the bulls to continue the upward trend.
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 1.1835 will increase pressure on the euro and lead to a larger downward correction of the pair. A break of the upper limit of the indicator in the area of 1.1855 will lead to a new wave of growth.
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.
