To open long positions on EUR/USD, you need:
Several excellent signals to enter the market were generated last Friday. Let's take a look at the 5 minute chart and understand the entry points. In my morning forecast, I paid attention to the 1.1341 level and advised you to make decisions on entering the market. Against the background of the absence of fundamental statistics and the pre-Christmas trading session, there was no one who regretted opening long positions at the current highs. As a result, it was possible to observe the formation of a false breakout in the resistance area of 1.1341, which resulted in forming an excellent signal to sell the euro. The fall was about 30 points. In the second half of the day, a false breakout in the support area of 1.1318 led to a signal to buy the euro. The growth was about 12 points.
Today there are no important statistics for the euro area and many markets are closed after Christmas, so volatility and trading volume are expected to be extremely low. For this reason, Friday's downward trend may continue until major support levels are updated. At the moment, bulls need to make every effort to protect the intermediate level of 1.1312, and only the formation of a false breakout will be a signal to buy the euro, counting on a recovery to the resistance at 1.1331, just below which there are moving averages playing on the bears' side. Surpassing this range is also an important task, and a reverse test from top to bottom will open the opportunity for growth to the area of new levels: 1.1358 and 1.1381, where I recommend taking profits. The next target will be the area of 1.1415. If the pair declines during the European session and the bulls are not active at 1.1312, it is best to postpone long positions until the larger support at 1.1291. This level is strategically very important for bulls, so one can count on the active growth from this range. However, I advise you to open long positions there when a false breakout is formed. The bulls' last hope to keep the pair in the upward correction channel will be the 1.1265 low, from which one 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 euro bulls showed themselves at the level of 1.1345 in an excellent manner, which has now transformed into 1.1331. The main task for the first half of the day is to protect this resistance. Considering that there are no important statistics today, it is quite possible that the bears will be able to do this. However, the low trading volume after Christmas could contain volatility, leading to conflicting market entry signals. Only the formation of a false breakout at 1.1331 creates the first entry point to short positions while expecting a return of pressure on the pair and a decline to the 1.1312 area. A more active struggle will unfold for this level. A breakdown and a test from below upward of this range will provide an additional signal to open short positions with the prospect of pulling down the pair to a large support level of 1.1291. Only a breakthrough of this level will remove a number of bulls' stop orders and cause a larger fall in EUR/USD with renewed lows: 1.1265 and 1.1246, where I recommend taking profits. If the euro grows and the bears are not active at 1.1331, it is best not to rush to sell. The optimal scenario will be short positions when a false breakout is formed in the 1.1358 area. It is possible to sell EUR/USD immediately on a rebound from the 1.1381 high, or even higher - in the 1.1415 region, 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 daily moving averages, which indicates an attempt by the bears to build a downward correction in the pair.
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 at 1.1305. In case of growth, the upper border of the indicator in the area of 1.1340 will act as a 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.
