To open long positions on EURUSD, you need:
In my morning forecast, I paid attention to the level of 1.1321 and advised making decisions on entering the market. Let's look at the 5-minute chart and figure out what happened. The decline in the German IFO indices and the lack of inflation growth in the eurozone in November this year did not allow the European currency to continue its bullish momentum in the first half of the day, which was observed yesterday. However, with all this, the bulls managed to protect the support of 1.1321. The formation of a false breakdown there led to a good signal to open long positions. At the time of writing, the pair went up 20 points and that was the end of it. We need more activity. Until the time when trading will be conducted above 1.3121, we can count on the continuation of the euro growth. From a technical point of view, nothing has changed, as well as in the strategy itself for the second half of the day. And what were the entry points for the pound this morning?
The release of important fundamental data is not scheduled for the American session, so trading will remain within the morning side channel, but buyers need to be aggressive. The 1.1321 level will not survive another test, so the whole emphasis is on it. Only the formation of a false breakdown in the area of 1.1321, by analogy with the morning entry point, will lead to the formation of a new signal to buy the euro. An equally important task will be to return to the rather important resistance of 1.1356, which has not yet been managed to get beyond. The test of this level from top to bottom forms an additional entry point into euro purchases with the prospect of building a new upward trend and updating the upper boundary of the wider 1.1381 side-channel formed on November 30. Its breakdown can seriously affect the EUR/USD downward trend, so be very careful at this level. A breakout and a top-down test of 1.1381 will open up the possibility of a major increase in the area of the highs: 1.1415 and 1.1442. A more distant target will be the 1.1480 level. If the pair declines during the American session and there is no bull activity at 1.1321, and there are moving averages playing on their side, it is best to postpone purchases to larger support of 1.1294. I advise buying EUR/USD immediately for a rebound from the minimum of 1.1266, or even lower - around 1.1245 with the aim of an upward correction of 20-25 points within a day.
To open short positions on EURUSD, you need:
The main task of the bears for the second half of the day remains the protection of the 1.1356 level. Only the formation of a false breakdown there will lead to the first entry point into short positions against yesterday's bull market, counting on the return of pressure on the pair and a decline to the area of intermediate support 1.1321, which has already been tested today. A breakthrough of this level and moving averages that pass below, as well as a reverse test from the bottom up of 1.1321, will give a signal to open short positions with the prospect of a decline to the area of 1.1294. A more distant target will be the 1.1266 level, where I recommend fixing the profits. In the case of the growth of the euro and the absence of bear activity at 1.1356, it is best not to rush with sales. The optimal scenario will be short positions when forming a false breakout in the area of 1.1381 – the last hope of the bears to keep the trend under their control. It is possible to sell EUR/USD immediately on a rebound from the highs: 1.1415 and 1.1442 with the aim of a downward correction of 15-20 points.
The COT report (Commitment of Traders) for December 7 recorded a decrease in short positions and a slight increase in long ones, which led to a decrease in the negative value of the delta. Many traders were preparing for the meetings of central banks that will be held this week. Very serious changes are expected in the monetary policy of the Federal Reserve System, as well as the European Central Bank. The inflation data force the management to act more aggressively, but which way it will choose is a rather difficult question. Last week there were several speeches by the Chairman of the Federal Reserve System Jerome Powell, who in his comments spoke enough about the expected changes in monetary policy towards its tightening. The omicron coronavirus strain also prevents Europeans and Americans from sleeping peacefully, which constrains demand for risky assets in the face of uncertainty about the future policy of the European Central Bank. The latest November COT report indicated that long non-profit positions rose from the level of 191,048 to the level of 194,869, while short non-profit positions fell from the level of 214,288 to the level of 203,168. This suggests that traders preferred to fix part of the profit before important events in the conditions of the formed side channel. At the end of the week, the total non-commercial net position decreased its negative value from -23,240 to -8,299. The weekly closing price, on the contrary, did not change due to the side channel - 1.1283 against 1.1292.
Signals of indicators:
Moving averages
Trading is conducted above 30 and 50 daily moving averages, which indicates the preservation of bullish sentiment.
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
If the euro falls, the lower limit of the indicator around 1.1310 will provide support. A break of the upper limit in the 1.1340 area will lead to a new wave of growth 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 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.
