To open long positions on EUR/USD, you need:
I paid attention to sales from the resistance level of 1.1906 yesterday, which brought more than 80 points of profit. I analyzed this entry in more detail on the 5-minute chart in yesterday's review, which you can find on the company's website. A signal to buy the euro formed on Thursday afternoon, when the pair declined to the support of 1.1813, but unfortunately, the reversal occurred 5 points earlier than the when the price tested the 1.1813 level. At the moment, we see how bears are gradually pushing the pair to this level, but it is now possible to open long positions from it only if a false breakout forms there, which may occur today in the first half of the day after fundamental data on industrial production in Germany and France have been released. The indicators should please traders. In this scenario, you can count on EUR/USD growing to the weekly high of 1.1906, but the further direction of the market will depend on how the bulls will show themselves there after the US labor market data has been published. Only a break and consolidation above this range will allow you to increase long positions in anticipation of continuing the bullish trend to the highs of 1.1987 and 1.2020, where I recommend taking profits. The 1.2054 area will be a more distant target. If the pressure on the euro persists, and there is no bull activity at the 1.1813 level, the next major support will be 1.1721, which is also the lower border of the current wide side channel.
Let me remind you that the Commitment of Traders (COT) report for July 28 recorded a sharp increase in long positions and only a small increase in short ones, which tells us about the continued interest of investors in risky assets against the background of the confusion that is happening in the US due to the coronavirus and the presidential election. The report shows an increase in long non-commercial positions from 204,185 to 242,127, while short non-commercial positions have grown only from 79,138 to 84,568. As a result, the positive non-commercial net position sharply jumped to 157,559, up from 125,047 a week earlier, indicating increased interest in buying risky assets even at current high prices.
To open short positions on EUR/USD, you need:
Sellers keep the 1.1906 resistance under control, and protecting it this week will allow us to count a larger bearish market forming in the future. In case the pair repeatedly grows, all the bears can count on another false breakout forming in the resistance area of 1.1906 in the morning. Only this scenario forms an entry point into short positions with the goal of descending to the middle of the 1.1813 channel. An equally important task for sellers of the euro today will be to consolidate below the 1.1813 level, which will form an additional signal to open short positions and push EUR/USD to a further low of 1.1721, where I recommend taking profits. If the demand for the euro persists after the US labor market data is released, then I recommend returning to short positions only after updating the high of 1.1987, or immediately on a rebound from the resistance of 1.2020, based on a correction of 30-40 points within the day.
Trading is carried out in the area of 30 and 50 moving averages, which indicates the sideways nature of the market before the release of important data.
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.
A breakout of the upper border of the indicator around 1.1890 will lead to a new wave of euro growth. A breakout of the lower border of the indicator in the 1.1815 area will increase pressure on the euro.
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) Fast EMA period 12. Slow EMA period to 26. SMA period 9
- Bollinger Bands (Bollinger Bands). Period 20
- Non-commercial traders are 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 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 short and long positions of non-commercial traders.