To open long positions on EUR/USD you need:
Euro buyers managed to continue the uptrend formed during the Asian session on Tuesday. However, they failed to break the level of 1.1657. Let's observe the 5-minute chart and examine the deals that were formed yesterday. In my morning forecast I analyzed the level of 1.1657 and advised to take it into account while making decisions. The bulls' first attempt to climb above 1.1657 resulted in a signal to sell the euro, though it failed to be realized. Slight pair's decline by 12 pips and then a smooth rebound to this level with a further break crashed bears' plans for a downward correction. A test of 1.1657 from the top down gave a signal to buy the euro. However, I did not observe a sharp rise there. An upside movement of 15 pips started and the pair came under pressure again. After bears broke 1.1657 and tested it from the bottom upwards, there was a selling signal during the American session. It led to the pair's rapid decline to the support area at 1.1632, giving a chance to get about 25 pips.
Today, quite relevant data on the eurozone's inflation are due. It has been widely discussed by
the ECB representatives lately. If the data exceeds the economists' forecasts - annual growth of 3.4% is expected in September, further strengthening of the European currency is highly possible as it will create the preconditions for the regulator's more serious reaction to the current situation. At the moment, it is extremely significant for bulls to resume the resistance at 1.1657 as they failed to do it yesterday during the American session. Only a break and fixation above this range, as well as its retest from the top down is a signal to buy the euro. This aspect will confirm the pair's upward potential and give an opportunity to expect a recovery to the high at 1.1683. Breakdown of this range with the similar test downwards will allow bulls to continue the uptrend considering the EUR/USD pair's strengthening towards 1.1713, where I recommend to take profit. A further target will be a high of 1.1742. In case of further pressure on the pair, weak Germany's producer prices data and ECB payment account balance, bulls will be concentrated on defending the support at 1.1632. Moving averages pass around it, favoring bulls. A false break there will form a good entry point into long positions. Besides, it will also confirm the lower boundary of the uptrend channel. If bulls demonstrate no activity at this level, I advise to postpone selling to the area of 1.1610, or even lower - from the low 1.1579, counting on a 15-20 pips rebound.
To open short positions on EUR/USD you need:
Bears hit a rather significant resistance level of 1.1657 yesterday and now it is necessary to defend it urgently as buyers are likely to resist. This scenario may be possible due to the eurozone's inflation data. Besides, the reading should coincide with economists' forecasts or even be worse. Only a false break around 1.1657 will resume the pair's real pressure, pushing it to the support at 1.1632 . A break and a test of that level from the bottom up will trigger the signal to open new short positions and to reject buyers' stop-losses. This fact will cause the EUR/USD pair to hit the low at 1.1610 and then 1.1579. A farther target is 1.1542, where I recommend to take profit. A test of this area will be a signal to resume the bear market for the euro. With the scenario of lack of sellers at 1.1657 it is better to postpone selling until the test of the major resistance at 1.1683. It is possible to open short positions immediately at a rebound, counting on a downward correction of 15-20 pips, from the new high at 1.1713.
Description of indicators
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. On the chart, it is marked in yellow.
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. On the chart, it is marked in green.
- MACD (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-commercial traders are speculators, such as individual traders, hedge funds and large institutions which 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.
- The total non-commercial net position is the difference between short and long positions of non-commercial traders.
