In my morning forecast, I paid attention to the 0.9941 level and recommended making decisions on entering the market from it. Let's look at the 5-minute chart and figure out what happened there. A false breakdown in the area of 0.9941 allowed buyers to respond to the downward correction, which, in their opinion, went quite far. As a result, a buy signal was formed, but I did not see a major upward leap. The maximum that could be counted on was 20 points of profit. Closer to the afternoon, this range broke down, and the euro headed to the area of annual lows. From a technical point of view, nothing has changed.
To open long positions on EURUSD, you need:
During the American session, data on the change in the volume of orders for long-term goods, as well as data on the change in the volume of pending transactions for the sale of housing, are released. The negative nature of the indicators can lead to a sharp upward jerk of the euro, as it was after yesterday's reports on PMI indices – this is the only thing that bulls can count on now. In the event of a further fall of the pair, which also cannot be ruled out in the conditions of a large bearish trend, only the formation of a false breakdown near the annual minimum of 0.9903 will lead to a signal to open long positions in the hope of restoring the pair with the prospect of updating the nearest resistance of 0.9941. It changed its status following the results of the first half of the day. A breakout and a top-down test of this range will hit the bears' stop orders, giving an additional signal to enter long positions with the possibility of a correction to the 0.9979 area. A more distant target will be the resistance of 1.0017, where I recommend fixing the profits. If EUR/USD declines and there are no buyers at 0.9903 in the afternoon, the pressure on the pair will remain. In this case, the best option for opening long positions will be a false breakdown near the new annual minimum of 0.9861. I advise buying EUR/USD immediately for a rebound only from 0.9830, or even lower – in the area of 0.9801 parity with the aim of an upward correction of 30-35 points within a day.
To open short positions on EURUSD, you need:
The bulls took advantage of the moment, but supporting a major upward correction has not yet been possible. Most likely, the focus will be on American statistics, and how traders react to it is very important. The main task of the bears for the American session will be to protect the new resistance of 0.9941, formed by the results of the first half of the day. The optimal scenario for opening short positions will be a false breakdown at this level, which will lead to a repeated movement of the euro down to the area of 0.9903. A breakdown and consolidation below this range on strong data on the US economy, as well as a reverse test from the bottom up – all this forms an additional sell signal and a larger pair movement to the 0.9861 area, where I recommend taking the profits. A more distant target would be the 0.9930 area. In the event of an upward movement of EUR/USD in the afternoon and the absence of bears at 0.9941, where the moving averages are, the situation may change again in favor of buyers. In this case, I advise you to postpone short positions to 0.9979, but only if a false breakdown is formed there. You can sell EUR/USD immediately on a rebound from the maximum of 1.0017 or even higher – from 1.0054 with the aim of a downward correction of 30–35 points.
The COT report (Commitment of Traders) for August 16 recorded a sharp increase in short and a reduction in long positions, which confirms the current position of the European currency against the US dollar. The risk of an impending recession in the US is now combined with the risk of more serious problems in the eurozone, which will begin this autumn against the background of a sharp rise in energy prices and further inflation, which the European Central Bank is still struggling with at a fairly moderate pace. At the end of this month, a meeting of American politicians will take place in Jackson Hole, where the focus will be on Fed Chairman Jerome Powell. The further direction of the pair will depend on this, as a strong dollar harms the American economy and further accelerates inflation, which the Central Bank is struggling with. The COT report indicates that long non-commercial positions decreased by 862 to the level of 199,226, while short non-commercial positions jumped by 7,386 to 242,010. At the end of the week, the total non-commercial net position remained negative and decreased to -42,784 against -34,536, which indicates a return of pressure on the euro and a further fall in the trading instrument. The weekly closing price decreased to 1.0191 against 1.0233.
Signals of indicators:
Moving Averages
Trading is below the 30 and 50-day moving averages, which indicates the continuation of the euro's decline.
Note. The author considers the period and prices of moving averages on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
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 use the futures market for speculative purposes and to 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.
