To open long positions on EUR/USD, you need:
Yesterday was not the most profitable day for trading the European currency, as the signals formed in the first half of the day did not materialize due to the pair staying in a narrow horizontal channel. Let's take a look at the 5 minute chart and understand the entry points. In my morning forecast, I paid attention to the 1.1291 level and advised you to make decisions on entering the market. The bulls' failure to regain control of the resistance at 1.1291 formed a signal to sell the euro, however, this did not lead to a major downward movement. After a slight drop by 10 points, the demand for the euro returned and the bulls broke through the resistance at 1.1291 the second time. A reverse test of this level from top to bottom led to forming a signal to buy the euro in continuation of the pair's upward correction, but the bulls failed. There was no upward movement. In the middle of the US session, a repeated test of 1.1291 from the bottom up led to forming a signal to sell the euro, after which the EUR/USD dropped to the nearest support at 1.1269.
Important statistics on the euro area will not be published today and most likely trading will continue in a narrow horizontal channel until the release of reports on the US economy. We are waiting for data on GDP and another estimate, which may surprise traders, which will lead to strengthening the dollar. Bulls currently need to make every effort to protect the 1.1262 support. Forming a false breakout there will be a signal to buy the euro, counting on a recovery to the middle of the 1.1285 channel, where the moving averages, playing on the side of bears, pass. A breakthrough of this range is also an important task, and a reverse test from top to bottom will open an opportunity for growth to the area of the upper border of the horizontal channel at the base of the 13th figure, which has not been broken above for several days. The 1.1332 level is a distant target, which is where I recommend taking profits. If the pair declines during the European session and the bulls are not active at 1.1262, it is best to postpone long positions until the larger support at 1.1246. I also advise you to open long positions there when a false breakout is formed. The bulls' last hope to keep the pair in the horizontal channel will be the 1.1224 low, from which you can open long positions immediately on a rebound, counting on an upward correction of 20-25 points within the day.
To open short positions on EUR/USD, you need:
The bears do not let the pair go above the 13th figure and this level is becoming very important. The bears' main task in the first half of the day is to protect the intermediate resistance at 1.1285. Considering that there are no important statistics today, it is quite possible that the bears will be able to do this. Forming a false breakout there creates the first entry point to short positions in hopes of maintaining pressure on the pair and a decline in the area of the lower border of the horizontal channel at 1.1262. A breakthrough and a test from below upward of this range will result in another signal to open short positions with the prospect of a decline to the 1.1246 area. Only a breakthrough of this level will destroy a number of bulls' stop orders and cause a larger fall in the pair with the renewal of the monthly lows around 1.1224, where I recommend taking profits. If the euro grows and the bears are not active at 1.1285, it is best not to rush to sell. The optimal scenario is short positions when a false breakout is formed around 1.1303. Selling EUR/USD immediately on a rebound is possible from the highs: 1.1332 and 1.1359, counting on a downward correction of 15-20 points.
I recommend for review:
The Commitment of Traders (COT) report for December 14 revealed that both short and long positions decreased, but the latter decreased slightly more, which led to an increase in the negative delta value. However, it should be noted that this data does not include the results of the meeting of the Federal Reserve and the European Central Bank. But if you look at the overall picture as a whole, trading in the horizontal channel is still preserved and even the meetings of the central banks did not make it possible to decide the pair's succeeding direction. Buyers of risky assets, and now we are talking about the euro, are in no hurry to build up long positions even after the ECB announced that it plans to fully complete its emergency bond purchase program as early as next March - this indicates a change in the bank's policy towards tightening it. On the other hand, the Fed 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 the coronavirus Omicron continues to scare off market participants from active actions: no one wants to buy an overbought dollar, but the cheap euro is not yet a very attractive instrument either. The COT report indicated that long non-commercial positions fell from 194,869 to 189,530, while short non-commercial positions fell from 203,168 to 201,409. This suggests that traders are taking a wait-and-see attitude amid 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 horizontal channel, did not change at all - 1.1283 against 1.1283 a week earlier.
Indicator signals:
Trading is carried out just below the 30 and 50 day moving averages, which indicates the bears' attempt to take control of the market.
Moving averages
Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differs from the general definition of the classic daily moving averages on the daily D1 chart.
Bollinger Bands
In case of a decline, support will be provided by the lower border of the indicator in the area of 1.1262. In case of growth, the upper border of the indicator in the area of 1.1290 will act as resistance.
Description of indicators
- Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
- Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
- MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
- Bollinger Bands (Bollinger Bands). Period 20
- Non-commercial 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 short and long positions of non-commercial traders.
