To open long positions on EUR/USD, you need:
Yesterday the bravest ones managed to make money on selling the euro, and those who don't like risk could make money on long deals of the single currency. Let's figure out where it is possible and necessary to enter the market. In the 5 minute chart, you can see that after Federal Reserve Chairman Jerome Powell said that the target inflation rate would go beyond 2.0%, there was a sharp increase in the euro to the resistance area of 1.1884, from where I recommended opening short positions immediately on the rebound. The downward movement was about 100 points. In addition, a good signal for buyers had appeared after a false breakout formed at the 1.1774 level, which led to an upward correction of about 50 points, as well as to the middle of the side channel of 1.1809. At the moment, we can see on the hourly chart that the bulls have not given up on the idea of breaking through the area above the 1.1849 resistance and are doing everything possible for this. Settling at this level forms a signal to buy the euro and will lead to a second update of the resistance of 1.1900, where I recommend taking profit. Today's fundamental data on the state of the US economy will help the euro's growth, since we can't expect anything good from this, according to economists' forecasts. The long-term goal of the bulls will be a high of 1.1947. In case of an unsuccessful attempt to settle above 1.1849, I recommend not to rush with long positions, but wait for a decline and a false breakout to the support of 1.1809. The moving averages also pass just above this level. It is best to open long positions in EUR/USD only for a rebound from the low of 1.1764, based on a correction of 25-30 points within the day. This level is also the lower limit of the current side channel, in which the euro is located for the entire week.
It is also worth recalling that the Commitment of Traders (COT) reports for August 18 recorded a reduction in long non-commercial positions from the level of 266,078 to the level of 259,244, while short non-commercial positions also decreased from the level of 66,327 to 62,301. Given that the closing of long positions turned out to be much larger, as a result, the positive non-commercial net position sharply fell to 196,943, compared to 199,751 a week earlier. However, such changes did not seriously affect the balance of power in the market, and most likely the demand for the euro will return, after a slight correction of the US dollar.
To open short positions on EUR/USD, you need:
Euro sellers have new tasks and goals for the end of the week. To begin with, you need to try and not let EUR/USD go above the resistance of 1.1849, where a false breakout will be a signal to open short positions in anticipation of a decline to the middle of the side channel of 1.1809, in which the pair spent the entire week. Settling below 1.1809 will be an additional signal to sell the euro while counting on a return to the lower border of the side channel of 1.1764, where I recommend taking profits. If the eurozone data that will be released in the morning allows EUR/USD to continue growing above the resistance of 1.1849, in this case I recommend postponing short positions once a rebound occurs from the resistance of 1.1900, or sell the pair even higher – from 1.1947 based on a correction of 25-30 points within the day.
Indicator signals:
Moving averages
Trading is carried out just above the 30 and 50 moving averages, which indicates a slight market uncertainty with further direction.
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.
Bollinger Bands
A breakout of the upper border of the indicator around 1.1850 will strengthen the demand for the euro. In case of a decline in the pair, intermediate support will be provided by the lower border of the indicator at 1.1785.
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.
- Total non-commercial net position is the difference between short and long positions of non-commercial traders.
