In my morning forecast, I focused on the 1.1017 level and planned to make market entry decisions based on it. Let's look at the 5-minute chart and see what happened. The rise to the 1.1017 level occurred, but there was no false breakout at that level. The technical setup has not changed for the second half of the day.
For Opening Long Positions on EUR/USD:
The lack of movement in the first half of the day is related to the empty economic calendar and the anticipated U.S. economic statistics, which will somewhat influence the Federal Reserve's plans. A drop in retail sales volume for July this year would negatively impact the dollar and help lower U.S. inflation further, so we might see a strong bullish surge in the euro after the data release. Additionally, we expect figures on initial jobless claims, industrial production changes, and a speech by FOMC member Patrick T. Harker. Given that the technical setup has not changed, if the statistics are weak, a decline and a false breakout around the 1.0984 support level would be a good condition for opening long positions, expecting further euro growth and strengthening of the bullish trend. A breakout and consolidation above 1.1017, an intermediate resistance, will lead to a strengthening of the pair with a chance to rise toward 1.1047. The ultimate target would be the 1.1076 maximum, where I plan to take profit. If EUR/USD declines and there is no activity around 1.0984 in the second half of the day, which would only happen with very strong U.S. data, sellers will have a chance for a larger correction and will start taking active measures to push the pair down. In that case, I would enter only after a false breakout around the next support at 1.0984, where the moving averages are located and providing support to buyers. I plan to open long positions immediately if the price rebounds from 1.0949, targeting an upward correction of 30-35 points within the day.
For Opening Short Positions on EUR/USD:
Sellers continue to lose initiative. The defense of the 1.1017 level seems to have held, but no downward movement followed. A false breakout at 1.1017 following the data release would provide a suitable scenario for opening short positions, targeting a decline to the intermediate support at 1.0984. A breakout and consolidation below this range, followed by a retest from the bottom up, will provide another point for selling with a move toward 1.0949, where I expect to see more active buyer presence. The ultimate target would be the 1.0916 area, where I will take profit. Testing this level would undermine euro buyers' plans to establish an upward trend. If EUR/USD rises in the second half of the day amid weak U.S. statistics and there is no bearish activity at 1.1017 and 1.1047, buyers will continue building a new upward trend. In that case, I would postpone sales until testing the next resistance at 1.1076. I will also act there but only after an unsuccessful consolidation. I plan to open short positions immediately on a rebound from 1.1111, targeting a downward correction of 30-35 points.
In the COT report (Commitment of Traders) for August 6, there was an increase in long positions and a reduction in short ones. Obviously, the Federal Reserve's new course on monetary easing has not gone unnoticed, and even despite similar actions expected from the ECB, the euro has every chance of recovering against the dollar, as the U.S. regulator might surprise everyone this fall by lowering rates by half a percentage point. Several statistics will be released soon that will determine the Fed's future actions, so it is crucial to monitor the economic calendar closely. The COT report indicates that long non-commercial positions increased by 2,793 to 185,799, while short non-commercial positions decreased by 12,988 to 152,219. As a result, the gap between long and short positions fell by 1,293.
Indicator Signals:
Moving Averages:
Trading is conducted around the 30 and 50-day moving averages, indicating market uncertainty.
Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differ from the general definition of classic daily moving averages on the D1 daily chart.
Bollinger Bands:
In the event of a decline, the lower boundary of the Bollinger Bands around 1.1000 will serve as support.
Indicator Descriptions:
- Moving average: A moving average, which determines the current trend by smoothing out volatility and noise. Period 50. Marked in yellow on the chart.
- Moving average: A moving average, which determines the current trend by smoothing out volatility and noise. Period 30. Marked in green on the chart.
- MACD Indicator: Moving Average Convergence/Divergence — the convergence/divergence of moving averages. Fast EMA period 12. Slow EMA period 26. SMA period 9.
- Bollinger Bands: Bollinger Bands. Period 20.
- Non-commercial traders: Speculators 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: The total long open position of non-commercial traders.
- Short non-commercial positions: The total short open position of non-commercial traders.
- Total non-commercial net position: The difference between short and long positions of non-commercial traders.
