To open long positions on EURUSD, you need:
In my morning forecast, I paid attention to the 1.1291 level and advised making decisions on entering the market. Let's look at the 5-minute chart and figure out what happened. An unsuccessful attempt by the bulls to regain control of the resistance of 1.1291 formed a sell signal for the euro, but this did not lead to a major downward movement. After a slight drop of 10 points, the demand for the euro returned and from the second time, the bulls achieved a breakout of the resistance of 1.1291. Now it is very important to protect this level since any return of the pair below 1.1291 will lead to a major sell-off of the euro.
Only the current account balance of the US balance of payments is scheduled for the US session, which is unlikely to have a serious impact on the US dollar in the short term. Therefore, the chances of further growth of EUR/USD remain quite good. To form the first signal to open long positions, protection of the 1.1291 level is required. Even in the first half of the day, after the breakdown of this range, there was no reverse test from top to bottom – it is necessary to wait for it, as this will help to make sure that buyers are present in the market. The formation of a false breakdown at 1.1291 will give a good entry point into long positions with the prospect of further recovery of the pair to the area of 1.1315. An equally important task will be to break through and consolidate above this range. Its top-down test forms an additional entry point into euro purchases with the prospect of a return to the resistance of 1.1348, where I recommend fixing the profits. After updating this level, we can talk about the return of the bullish potential for EUR/USD. With the pair declining during the American session and the absence of bull activity at 1.1291, it is best to postpone purchases to larger support of 1.1269. I advise you to open long positions there also only if a false breakdown is formed. You can buy EUR/USD immediately on a rebound from the minimum of 1.1248, or even lower - around 1.1224 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 is to regain control over the level of 1.1291, which they missed during the European session, as well as the protection of 1.1315. Only the formation of a false breakdown at 1.1315, by analogy with the one I analyzed a little above, forms the first entry point into short positions, counting on the return of pressure on the pair and its decline to the area of 1.1291. A breakdown and a bottom-up test of this support, which acted as resistance in the morning, will lead to another signal to open short positions with the prospect of a decline to the area of 1.1269. There are moving averages that limit the downward potential of the pair, so be careful. Only going beyond this level, together with strong data on the US economy, will demolish several buyers' stop orders and cause a larger drop in EUR/USD with the resumption of the bearish trend in the area of 1.1248 and 1.1224. A more distant target will be the 1.1208 level, where I recommend fixing the profits. In the case of the growth of the euro and the lack of activity of bears at 1.1315, it is best not to rush with sales. The optimal scenario will be short positions when forming a false breakdown in the area of 1.1348. It is possible to sell EUR/USD immediately on a rebound from the highs: 1.1381 and 1.1415 with the aim of a downward correction of 15-20 points.
The COT report (Commitment of Traders) for December 14 recorded a decrease in both short and long positions, but the latter reduction turned out to be slightly larger, which led to an increase in the negative value of the delta. However, it is worth noting that these data do not take into account the results of the meeting of the Federal Reserve System and the European Central Bank. But if we look at the overall picture, trading in the side channel remains the same, and even the meetings of the central banks did not allow us to decide on the further direction of the pair. Buyers of risky assets, and we are talking about the euro now, are not in a hurry to build up long positions even after the statement of the European Central Bank that it plans to fully complete its emergency bond purchase program in March next year - this indicates a change in the bank's policy towards its tightening. On the other hand, the Federal Reserve is already planning to raise interest rates by this time, which makes the US dollar more attractive. However, the uncertainty with the new strain of omicron coronavirus continues to scare market participants away from active actions: no one wants to buy an overbought dollar, but the cheap euro is also not a very attractive tool yet. The COT report indicates that long non-profit positions decreased from the level of 194,869 to the level of 189,530, while short non-profit positions fell from the level of 203,168 to the level of 201,409. This suggests that traders are taking a wait-and-see attitude against the backdrop of all the uncertainty with the global economy. At the end of the week, the total non-commercial net position increased its negative value from -8,299 to 11,879. The weekly closing price, due to the side channel, did not change at all – 1.1283 against 1.1283 a week earlier.
Signals of indicators:
Moving averages
Trading is conducted above 30 and 50 daily moving averages, which indicates an attempt by the bulls to win back Friday's fall in the euro.
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 break of the upper limit in the area of 1.1296 will lead to a new wave of growth of the pair. In case of a decline in the pair, the lower limit of the indicator in the area of 1.1269 will act as support.
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.
