To open long positions on EURUSD, you need:
In my morning forecast, I paid attention to the level of 1.1723 and recommended that you make decisions on entering the market from it. Let's look at the 5-minute chart and figure out what happened. It is visible how buyers of the European currency managed to protect the support of 1.1723 on their own even against the background of the absence of important fundamental statistics, forming an entry point into long positions, which continues to operate at the time of writing. It leaves buyers with a chance for a further upward correction of the pair. From a technical point of view, nothing has changed. The second half of the day will focus on data on the US housing market. However, it is unlikely that they will significantly affect the balance of forces in the market. Therefore, while trading will be conducted above 1.1723, we can count on the euro's recovery in the short term. However, only the pair's decline and the next formation of a false breakdown there form a new signal to open long positions against the trend, counting on an upward correction to the nearest resistance of 1.1756. A break of this range and its reverse test from top to bottom will be a good entry point into long positions already in the continuation of the euro's growth with an update to the maximum of 1.1787, where I recommend fixing the profits. Such a movement can be counted on only if there is good news on approving an increase in the US national debt limit.
Given that we will have a meeting of the Federal Reserve System tomorrow, we can also expect small profit-taking on the US dollar and a rise in the euro in the afternoon. In the scenario of a decline in EUR/USD during the US session and the lack of activity in 1.1723, you can open long positions in EUR/USD after a false breakdown in the area of 1.1702. However, I advise buying EUR/USD immediately for a rebound only at the minimum of 1.1676, or even lower – in the area of 1.1652, counting on an upward correction of 15-20 points within the day.
To open short positions on EURUSD, you need:
Sellers of the euro still lack the "spirit" after a major drop observed at the end of last week. The primary task now is to protect the resistance of 1.1756, which will be targeted by buyers in the second half of the day. Only the formation of a false breakdown there can lead to the formation of a signal to open short positions in the continuation of the bear market and with the initial goal of reducing to the area of the morning support of 1.1723. The next task of the bears during the American session will be to return this level under control, which they failed to do in the morning, although there were attempts. Its breakthrough and a reverse test from the bottom up to Vesta with strong indicators on the US housing market will return pressure on the pair and form a signal to sell the euro with a fall to a minimum of 1.1702. A more distant target will be the area of 1.1676. However, such a powerful downward movement can be counted on today only after negative news about the US national debt and the likelihood of a new crisis. If EUR/USD rises in the afternoon and there is no activity at 1.1756, it is best to postpone selling until the test of a larger resistance of 1.1787. 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 1.1817.
The COT report (Commitment of Traders) for September 14 recorded a reduction in long and short positions. All this is a consequence of the wait-and-see attitude of traders in the early autumn of this year when the Federal Reserve System can shed light on its further monetary policy. A lot will now depend on how the US authorities solve the problem of the national debt limit, which is already putting pressure on stock markets, returning demand for the US dollar, which harms risky assets. This week, the situation on this issue should somehow become clearer. The demand for risky assets is also limited due to the high probability of another wave of the spread of the coronavirus 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, which limits the upward potential of the EUR/USD pair. The COT report indicates that long non-commercial positions decreased from 189,904 to the level of 186,554, while short non-commercial positions decreased from the level of 163,596 to the level of 158,749. At the end of the week, the total non-commercial net position rose slightly to 27,805 from 26,308. The weekly closing price fell from 1.1870 to 1.1809.
Signals of indicators:
Moving averages
Trading is conducted just above the 30 and 50 daily moving averages, which does not give many advantages to euro buyers yet.
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 1.1723 will increase the pressure on the euro and lead to a larger downward correction of 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.
