To open long positions on EUR/USD, you need:
There were no signals for entering the market in the afternoon given the low volatility of the market, and Columbus Day in the US, although it is already obvious that Friday's bullish momentum is gradually fading away, and the pressure on the euro is returning.
Nothing has changed from a technical point of view since none of the levels that we mentioned yesterday were tested. The only way for the euro to grow is if a breakout appears and the price settles above the resistance of 1.1824, which will open a direct road to new highs in the 1.1868 and 1.1915 areas, where I recommend taking profits. However, we can expect such a strong bullish momentum in the beginning only if the latest inflation indicators in Germany turn out to be good, as well as if we receive a high assessment of the sentiment of the eurozone business environment. The reports are scheduled for release in the first half of the day. If the pressure on the pair persists further, and this option is more realistic, testing support at 1.1783, where the moving averages pass, playing on the side of buyers, will become a more optimal buying scenario. However, it is possible to open long positions from this level only if a false breakout is formed there. If bulls are not active, I advise you to hold back from buying the euro to a larger support area of 1.1737, from where you can enter the market immediately on a rebound, counting on a correction of 30-40 points.
The Commitment of Traders (COT) report for October 6 showed a reduction in long positions and an increase in short positions, which led to an even greater decrease in the delta. Buyers of risky assets believe in sustaining the bull market, but prefer to proceed with caution, as there is no good news about the eurozone and the pace of economic recovery so far. Thus, long non-commercial positions decreased from 241,967 to 231,369, while short non-commercial positions increased from 53,851 to 57,061. The total non-commercial net position decreased to 174,308, against 188,116 a week earlier. which indicates a wait-and-see attitude of new players. However, bullish sentiments for the euro remain rather high in the medium term.
To open short positions on EUR/USD, you need:
The bears failed to emerge in the afternoon, since they did not reach resistance at 1.1828, and also failed to test support at 1.1783. An important task for the sellers of the euro is to form a breakout and settle below the 1.1783 area, which forms a new entry point for short positions with the goal of falling to a low of 1.1737, where I recommend taking profits. If the pair rises in the afternoon, one can expect a rebuff from the bears at the 1.1824 level. However, I recommend opening short positions from it only if a false breakout is formed there. In case bears are not active, as well as quite good data on German inflation, it is best not to rush to sell, but to wait until a larger resistance at 1.1868 has been updated, from where you can sell the euro immediately on a rebound, counting on a correction of 20-30 points within the day...
Indicator signals:
Moving averages
Trading is carried out in the area of 30 and 50 moving averages, which indicates a slowdown in bullish momentum.
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 classic daily moving averages on the D1 daily chart.
Bollinger Bands
A breakout of the upper border of the indicator in the 1.1824 area will lead to a new wave growth for the euro. A breakout of the lower border of the indicator around 1.1794 will increase the pressure on the pair.
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.
