To open long positions on EURUSD, you need:
Despite several fundamental statistics on the eurozone, which disappointed traders with their indicators on the decline in retail trade in Germany and activity in the manufacturing sector of the eurozone countries, the euro continues to hold its position near local lows, which leaves a chance for an upward correction in the afternoon. Considering the fact that none of the levels I indicated were tested, it was not possible to see signals for entering the market in the first half of the day. From a technical point of view, everything remained unchanged for the second half of the day. In the afternoon, we need to look at the market reaction, which may lead to a surge in volatility after reports on the ISM manufacturing index and the consumer sentiment index from the University of Michigan. An increase in the level of spending by the US population will also be important, which will affect a possible increase in retail sales in the coming months. During the American session, an important task for buyers will be the same protection of the 1.1564 support, which was formed following yesterday's results. A very strong upward correction can be built from this level today, so I advise you to pay special attention to it. Only the formation of a false breakdown will lead to the formation of a signal to open long positions in the expectation of an upward correction to the resistance area of 1.1596, where the moving averages are playing on the side of the bears. A breakout and a top-down test of this level, together with weak data on the US economy, form a convenient entry point into long positions to restore the pair to the 1.1620 area. A more distant target will be the 1.1642 area, where I recommend fixing the profits. In the scenario of the absence of bull activity at the level of 1.1564, I advise you to postpone purchases to new lows in the area of 1.1538 and 1.1510. It is possible to immediately open long positions for a rebound at the new local support of 1.1482, counting on an upward correction of 15-20 points within the day.
To open short positions on EURUSD, you need:
The situation for the sellers of the euro is quite delicate, since in the first half of the day, we did not see the breakdown of the week's lows, as it happened throughout the week – a very unpleasant call for the bears. An important task in the afternoon remains the breakthrough of the 1.1564 level, which was formed following yesterday's results. Only such a scenario will keep the pressure on the pair, and the 1.1564 update from the bottom up will form a new entry point into short positions to reduce EUR/USD to the 1.1538 area. The only thing that calms is the return of the MACD indicator from the oversold area to the zero mark area. However, before new sales, it is necessary to resist any attempt to increase the indicator, resulting from an upward correction of the pair. In case of a breakout of local lows, the next target will be the support of 1.1538. An equally important task for the bears will be to protect the resistance of 1.1596. Weak fundamental data on the US may contribute to the growth of EUR/USD to this range. The formation of a false breakout there forms a good entry point into short positions. In the scenario of the absence of sellers at the level of 1.1596, it is best to postpone sales until the test of a larger resistance of 1.1620 or open short positions immediately for a rebound based on a downward correction of 15-20 points from the new high of 1.1642.
The COT report (Commitment of Traders) for September 21 recorded a sharp increase in short positions and only a slight increase in long ones, which is due to the lack of desire among traders to bet on strengthening risky assets in the early autumn of this year. The prospect of changes in the monetary policy of the Federal Reserve System in November this year keeps the demand for the US dollar, as many investors expect the start of the reduction of the bond purchase program by the Central Bank. The fact that inflation in the United States of America is almost out of the control of the Fed suggests possible more aggressive actions by the end of the year, which could seriously affect the mood of traders and investors. This week, there will be many speeches by representatives of the Fed, including Chairman Jerome Powell, who can shed light on how the Central Bank will act in this or that situation. Given that energy prices continue to fly up, which will necessarily affect the producer and consumer price index, specifics from the Federal Reserve System certainly would not harm the markets. Demand for risky assets will remain limited due to the high probability of another wave of the spread of 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 since there are no serious inflationary problems in the eurozone yet. The COT report indicates that long non-commercial positions have grown quite a bit – from the level of 186,554 to the level of 189,406, while short non-commercial positions have jumped quite seriously – from the level of 158,749 to the level of 177,311. At the end of the week, the total non-commercial net position dropped from the level of 27,805 to the level of 12,095. The weekly closing price also fell to 1.1726 from 1.1809.
Signals of indicators:
Moving Averages
Trading is conducted around 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
Only a breakthrough of the lower limit of the indicator in the area of 1.1564 will increase the pressure on the euro.
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.
