To open long positions on EURUSD, it is required:
In my morning forecast, I paid attention to the level of 1.1557 and recommended making decisions on entering the market. Let's look at the 5-minute chart and figure out the entry point. Weak data on the eurozone returned pressure on the pair. As a result, several unsuccessful attempts to break 1.1557 were formed, which only led to the formation of a signal to sell the euro. At the time of writing, the pair has already fallen from the entry point by 25 points. However, from a technical point of view, nothing has changed for the second half of the day.
Now the focus has shifted to data on the US labor market and it is on them that the further direction of the dollar depends. Of course, the bulls will not give up hope of going beyond the resistance of 1.1557, which they failed to do in the first half of the day. Only weak data on the number of new jobs in the US and the reverse test of 1.1557 from top to bottom form an entry point into long positions to restore EUR/USD to the area of 1.1587, where I recommend fixing the profits. A break in this range will lead to an additional buy signal and a return of EUR/USD to the upper boundary of the wide side channel 1.1615. In case of continued pressure on the pair and strong US data, only the formation of a false breakdown around 1.1529 will give an excellent signal to buy the euro with the aim of an upward correction. In the scenario of the lack of activity of buyers at 1.1529, it is best to wait for the formation of a false breakdown in the area of 1.1494. However, you can open long positions in EUR/USD immediately to rebound from the minimum of 1.1454, or even lower - from 1.1426, counting on a correction of 15-20 points inside the day.
To open short positions on EURUSD, you need:
Euro sellers coped with the task assigned to them. However, from a technical point of view, nothing has changed much. In the case of EUR/USD growth during the US session before the release of the Nonfarm Employment Change report, only the formation of a false breakdown in the area of 1.1557 will lead to the formation of another signal to sell the euro to reduce to the support of 1.1529. The fact that the bears did not reach this level during the European session, having stopped from it in one step, indicates the presence of a large static player there, whose further presence will depend on US data. Only the breakout of this range and its update from the bottom up form an additional signal to open new short positions, followed by a fall of the pair to the area of 1.1449. A breakdown of this range will also lead to the demolition of buyers' stop orders, which will quickly dump EUR/USD to 1.1454, where I recommend fixing the profits. A more distant goal will be the support of 1.1426, but it will be available only in the case of very good reports on the American labor market. In the scenario of the pair's growth in the afternoon and the absence of sellers at the level of 1.1557, it is best to postpone sales until the test of the maximum of 1.1587. It is possible to open short positions immediately for a rebound based on a downward correction of 15-20 points from a large resistance of 1.1615.
The COT report (Commitment of Traders) for 19 recorded a reduction in both short and long positions, which led to a slight recovery of the negative delta, as more sellers left the market than buyers. The slowdown in activity in the manufacturing and services sectors of the eurozone this week will not allow euro buyers to get beyond the 16th figure. However, the key problem in the shorter term, which harms the growth of the euro, is the sharp spread of the fourth wave of coronavirus infection throughout the European Union. As for the United States of America, the good pace of activity of the American economy and the expected reduction of the economic support program will not create serious problems for economic growth in the future. However, this will not help the US dollar much, as investors will prefer risky assets. The COT report indicates that long non-commercial positions decreased from the level of 202,512 to the level of 193,320, while short non-commercial positions dropped from the level of 220,910 to the level of 205,427. At the end of the week, the total non-commercial net position decreased and amounted to -12,107 against -18,398. The weekly closing price rose to the level of 1.1613 against 1.1553.
Signals of indicators:
Moving averages
Trading is conducted below 30 and 50 daily moving averages, which indicates the formation of a bear market.
Note: The period and prices of moving averages are considered by the author 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 breakthrough of the lower limit of the indicator in the area of 1.1530 will lead to an instant fall of the euro. In case of growth, the upper limit of the indicator around 1.1560 will act as resistance.
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 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 the short and long positions of non-commercial traders.
