Yesterday, the pair formed some great entry signals. Let's have a look at what happened on the 5-minute chart. In my morning review, I mentioned the level of 1.0928 as a possible entry point. The pair fell, but we did not reach the test and a false breakout at 1.0928. The reason was low market volatility. In the afternoon, a false breakout at 1.0962 generated a sell signal, but after falling by 15 pips, the demand for the euro returned. Safeguarding this range was not successful, and we incurred losses on short positions. By the middle of the U.S. session, shorts on a false breakout from 1.1004 made it possible to offset some losses and earn a bit.
For long positions on EUR/USD:
Yesterday, traders were focused on the statements of the Federal Reserve officials, who continued to talk about good progress in reducing inflation and achieving targets, which caused another U.S. dollar sell-off and pushed the euro in the area of new monthly highs. Today, traders will focus on the eurozone consumer confidence indicator. A decline, along with a weak report on the German consumer price index, will exert pressure on the euro. For this reason, I will act on a decline after a false breakout near the nearest support at 1.0978. This is in line with the bullish moving averages. Safeguarding 1.0978 will generate a buy signal for a breakout to the monthly high of 1.1015 and may continue the uptrend. A breakout and update from top to bottom of this area will give another buy signal, paving the way to 1.1058. The highest target will be the area of 1.1103, where I will take profits. In the scenario of a decrease in EUR/USD and the absence of activity at 1.0978 in the first half of the day, the instrument will remain trading sideways. In such a case, it will be possible to enter the market after forming a false breakout near the support at 1.0947. I will open long positions immediately on a rebound from 1.0921, bearing in mind an upward correction of 30-35 pips within the day.
For short positions on EUR/USD:
Sellers repeatedly tried to stop the bull market yesterday, but as you can see, it didn't go so well. I do not advise rushing to sell against the uptrend today. Only a failed consolidation above 1.1015 along with a divergence forming on the MACD indicator will generate a sell signal in anticipation of a downward correction to the area of 1.0978. Disappointing report on Germany and the eurozone along with a breakout and consolidation below this range will lead to another sell signal at 1.0947. The lowest target will be the low of 1.0921, where I will take profits. Testing this level could significantly impact the future prospects of the buyers. In case of an upward movement of EUR/USD during the European session and in the absence of the bears at 1.1015, the bullish market will develop further. This will open the way for the buyers to the high of 1.1058. There, selling is also possible but only after a failed consolidation. I will open short positions immediately on a rebound from 1.1103 aiming for a downward correction of 30-35 pips.
COT report:
In the COT report (Commitment of Traders) for November 21, there was an increase in long positions and another significant decline in short positions. Statements by ECB policymakers and their commitment to high interest rates encouraged traders to add long positions on EUR/USD last week. Besides, a series of PMI reports also demonstrated a slight recovery in some eurozone countries, leaving a chance to avoid a recession in Q4 of this year. The minutes of the Federal Reserve's November meeting slightly dampened the zeal of the buyers of risky assets but did not particularly affect the development of the bullish trend. Soon, a lot of important fundamental statistics on inflation and consumer confidence will be released, which will definitely affect the market direction. The COT report indicated that long non-commercial positions grew by 9,905 to 231,095, while short non-commercial positions decreased by 10,842 to 101,441. As a result, the spread between long and short positions increased by 1,170. EUR/USD closed on Friday higher at 1.0927 compared to 1.0902 a week ago.
Indicator signals:
Moving averages:
The instrument is trading above the 30 and 50-day moving averages. It indicates that EUR/USD is likely to rise further.
Please note that the time period and levels of the moving averages are analyzed only for the H1 chart, which differs from the general definition of the classic daily moving averages on the D1 chart.
Bollinger Bands
If EUR/USD declines, the indicator's lower border near 1.0960 will serve as support.
Description of indicators:
• A moving average of a 50-day period determines the current trend by smoothing volatility and noise; marked in yellow on the chart;
• A moving average of a 30-day period determines the current trend by smoothing volatility and noise; marked in green on the chart;
• MACD Indicator (Moving Average Convergence/Divergence) Fast EMA with a 12-day period; Slow EMA with a 26-day period. SMA with a 9-day period;
• Bollinger Bands: 20-day period;
• Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements;
• Long non-commercial positions represent the total number of long positions opened by non-commercial traders;
• Short non-commercial positions represent the total number of short positions opened by non-commercial traders;
• The non-commercial net position is the difference between short and long positions of non-commercial traders.
