To open long positions on EUR/USD, you need:
In yesterday's afternoon forecast, I pointed to short deals from the 1.2164 level and paid attention to forming a signal to enter the market. Let's take a look at the 5-minute chart and talk about what happened. Buyers' failure to surpass resistance at 1.2164 led to forming a false breakout in this range, and a reverse test of this level from the bottom up in the afternoon confirmed the presence of sellers in the market, which caused EUR/USD to fall by more than 40 points. From a technical point of view, nothing has changed, since there wasn't any important fundamental data in the afternoon.
Buyers need to take control of resistance at 1.2164, as only this will lead to another upward wave and can sustain the bull market. A breakout and being able to settle above 1.2164 and testing it from top to bottom produces a good signal to buy EUR/USD in hopes of updating the next high at 1.2211, where I recommend taking profits. The next target will be the high of 1.2255, which buyers will be aiming for this week. Considering that important fundamental statistics on the eurozone economy will not be released today, it will hardly be possible to count on a breakout of 1.2255. However, if this happens, I recommend building up long positions to the highs of 1.2339 and 1.2417. In case the euro falls in the first half of the day and buyers are unable to go above 1.2164, it is best not to rush into long positions, but wait until a false breakout forms in the support area of 1.2110. I recommend buying EUR/USD immediately on a rebound from a low of 1.2060, counting on a correction by 20-25 points within the day.
To open short positions on EUR/USD, you need:
Sellers will actively defend resistance at 1.2164, just above which the annual highs pass. Forming a false breakout there ,similar to yesterday's deal, which I figured out a little higher, will lead to producing a new downward correction, which will be aimed at surpassing the 1.2110 low. Being able to settle below this range will open a direct road to the 1.2060 area, where I recommend taking profits. The next target will be the 1.1986 area, testing it will mean a reversal of the current upward trend. If the bulls find strength after receiving reports on inflation in Italy and France for November, and they also manage to surpass the resistance of 1.2164, I recommend not to rush to sell. The optimal scenario would be a test of the 1.2211 high, where a false breakout will be a signal to sell the euro. I recommend opening short positions immediately on a rebound from the 1.2255 level, counting on the pair's correction down by 15-20 points.
The Commitment of Traders (COT) report for December 8 recorded an increase in long positions and a reduction in short positions. Buyers of risky assets believe in sustaining the bull market and the euro's growth after surpassing the psychological mark in the area of the 20th figure. Thus, long non-commercial positions rose from 207,302 to 222,521, while short non-commercial positions fell from 67,407 to 66,092. The total non-commercial net position rose from 139,894 to 156,429 a week earlier. It is worth paying attention to the growth of the delta, observed for the third consecutive week, which completely negates the bearish trend observed at the beginning of this fall. We can only speak of a larger recovery after European leaders negotiate a new trade agreement with Britain.
Indicator signals:
Moving averages
Trading is carried out in the area of 30 and 50 moving averages, which indicates the sideways nature of the market.
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 D1 daily chart.
Bollinger Bands
In case of a breakout of the upper border of the indicator in the 1.2168 area, we can expect an increase in demand for the euro. A breakout of the lower border of the indicator in the 1.2135 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) Quick EMA period 12. Slow EMA period to 26. SMA period 9
- Bollinger Bands (Bollinger Bands). Period 20
- Non-commercial speculative traders, 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.
- Total non-commercial net position is the difference between short and long positions of non-commercial traders.
