FX.co ★ EUR/USD: trading plan for the US session on September 19th (analysis of morning deals). The euro continued correction

In my morning forecast, I pointed out the level of 1.0695 and recommended making decisions based on it for market entry. Let's look at the 5-minute chart and analyze what happened there. A rise and the formation of a false breakout became a reason to sell the euro. Still, after a 10-point drop, the demand for risk assets returned, leading to another test and breakout of 1.0695 in continuation of the upward correction. The technical picture was slightly revised in the second half of the day.

To open long positions on EUR/USD, the following is required:

Inflation data in the Eurozone signaled a larger decline in core prices in the region in August, which led to an upward movement in the euro. Such data allow the European Central Bank to pause the next meeting, which will cause less damage to the economy if the regulator continues aggressively raising rates. In the second half of the day, we await data on the volume of building permits issued and the number of new foundation layings in the US. Good indicators will pressure the pair, and large buyers will have to step in if they are really present in the market, which I doubt. Only the formation of a false breakout around the new support level of 1.0688, formed at the end of the first half of the day, will confirm a suitable entry point for long positions with the goal of further recovery to the level of 1.0725 - intermediate resistance on the way to last week's highs. Breaking and testing this range from top to bottom will strengthen demand for the euro, giving a chance for a pair correction and a jump to 1.0767. The ultimate target will be the area of 1.0798, where I will take profit. In the case of a decline in EUR/USD and the absence of activity at 1.0688, which is more likely to happen, bears will strengthen their control over the market. In this case, only the formation of a false breakout around 1.0657 will signal a euro buy. I will open long positions from a rebound at 1.0620 with a 30-35 point upward correction target within the day.

To open short positions on EUR/USD, the following is required:

Sellers have also taken a wait-and-see position before an important Federal Reserve meeting starts and are quick to return to the market. For this reason, I will monitor the entry point for short positions around 1.0725, where a false breakout will be an excellent signal, opening the way to the level of 1.0688. Below 1.0688, moving averages pass, playing on the bulls' side, so breaking and retesting this level from bottom to top will form another sell signal with the prospect of returning to 1.0657. The ultimate goal will be a new monthly minimum of 1.0620, where I will take profit. In case of an upward movement of EUR/USD during the American session and the absence of bears at 1.0725, which is quite possible after the morning inflation data, euro buyers can maintain the advantage and continue the pair's growth. In this scenario, I will postpone short positions until the new resistance of 1.0767. It's also possible to sell there, but only after an unsuccessful consolidation. I will open short positions from a rebound at 1.0798 with a 30-35 point downward correction target.

In the COT report (Commitment of Traders) for September 12, there was a sharp reduction in long positions and only a slight decrease in short positions. Very serious negative changes in activity in the Eurozone and a downward revision of GDP for the second quarter did not prevent the European Central Bank from raising interest rates again. As you understand, this will not lead to anything good soon, which caused such a sharp drop in the European currency. In the near future, we will have a Federal Reserve meeting. If the committee also decides to expand rates, the euro will fall even further against the dollar, so I recommend not rushing into purchases in the current conditions. The COT report states that long non-commercial positions decreased by 23,356 to 212,376, while short non-commercial positions decreased by only 205 to 99,296. As a result, the spread between long and short positions increased by 6,589. The closing price fell to 1.0736 from 1.0728, indicating a bearish market.

Indicator signals:

Moving averages

Trading is conducted above the 30 and 50-day moving averages, indicating an uptrend.

Note: The period and prices of moving averages considered by the author are on the hourly H1 chart and differ from the general definition of classical daily moving averages on the daily D1 chart.

Bollinger Bands

In the case of an uptrend, the upper boundary of the indicator around 1.0702 will act as resistance.

Description of indicators:

• Moving average (determines the current trend by smoothing volatility and noise). Period 50. Marked in yellow on the chart.

• Moving average (determines the current trend by smoothing volatility and noise). Period 30. Marked in green on the chart.

• MACD indicator (Moving Average Convergence/Divergence - convergence/divergence of moving averages). Fast EMA period 12. Slow EMA period 26. SMA period 9.

• Bollinger Bands. Period 20.

• Non-commercial traders - speculators, such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting 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.

• The total non-commercial net position is the difference between non-commercial traders' short and long positions.