To open long positions on EURUSD, you need:
In my morning forecast, I paid attention to the level of 1.1882 and recommended that you decide to enter the market from it. Let's look at the 5-minute chart and talk about what happened. The breakthrough and consolidation above the resistance of 1.1882 and the subsequent trading at this level led to the formation of a signal to buy the euro, which was realized immediately after the release of German retail sales data. The report turned out to be much better than economists' forecasts. In the second half of the day, the focus will remain on the support of 1.1882. A strong report from the ISM on the production index may harm the plans of buyers of the European currency. Therefore, with a decline to the support of 1.1882, the formation of a false breakdown will lead to the formation of a new signal to open long positions to continue the upward trend. In this case, the target will be the maximum of the previous week in the area of 1.1904. A breakout and a test of this range from top to bottom form an additional entry point into long positions already in the expectation of recovery to the maximum of 1.1937. A more distant target will be the level of 1.1984, where I recommend fixing the profits. If there is no bull activity in the area of 1.1882, it is best not to rush to buy. The optimal scenario will be long positions for a rebound from the daily low of 1.1860 or even lower - from large support of 1.1843, based on an upward correction of 15-20 points within the day.
To open short positions on EURUSD, you need:
The sellers failed to cope with the task set for them and could not protect the resistance of 1.1882, which was won back at the end of last week during the downward correction of the pair. If today's report on manufacturing activity in the US does not exceed the forecasts of economists, we can expect further growth of the pair in an attempt to return to the control of the resistance of 1.1904. I advise you to wait for the formation of a false breakdown and open short positions to reduce to the support of 1.1882. However, only a breakdown of this level and a reverse test from the bottom up will form an excellent entry point into short positions to return EUR/USD to the day's minimum of 1.1860. A breakout of this range will also hit several stop orders of the bulls, which will push the pair to larger lows: 1.1843 and 1.1824, where I recommend fixing the profits. In the case of EUR/USD growth during the US session after the publication of data on the ISM index and the lack of activity of sellers in the area of 1.1904, it is best to open short positions only when a false breakdown is formed at a new local maximum of 1.1937. I advise you to sell the pair immediately for a rebound based on a downward correction of 15-20 points only from the level of 1.1937.
In the COT report (Commitment of Traders) for July 20, the market continued to be skewed towards sellers of risky assets. Long positions decreased, and short positions increased, which led to another reduction in the overall positive net position. The meeting of the European Central Bank last week undermined the mood of euro buyers. It became clear to everyone that the regulator will not rush to tighten monetary policy and maintain the program of emergency bond purchases for as long as possible to stimulate inflationary growth to achieve its new goal of 2.0%. In the US, the situation is the opposite. Inflation has long gone beyond the target value, and many representatives of the Federal Reserve System point to the need to abandon ultra-soft measures to stimulate the economy in the near future, which plays on the side of the US dollar. And no matter how the US Central Bank tries to convince investors that this is just a temporary phenomenon, the market continues to abandon risky assets favoring safe-haven assets, which is the US dollar. This week, we will publish the FOMC decision on the main interest rate, which may strengthen the position of the US dollar if the management seriously considers the issue of reducing the bond purchase program in the fall of this year. But the lower the euro falls, the higher the demand for it will be in the medium term since the attractiveness of risky assets will not go anywhere. The COT report indicates that long non-commercial positions decreased from 212,851 to the level of 208,669, while short non-commercial positions increased from the level of 153,138 to the level of 162,847. In addition to the decision of the Federal Reserve System at the end of the week, we are waiting for data on changes in the volume of US GDP for the 2nd quarter of this year, where growth is expected to increase by 8.4% immediately. It can also become a powerful bullish impulse for the US dollar. The total non-commercial net position decreased from the level of 59,713 to the level of 45,822. The weekly closing price fell from the level of 1.1862 to 1.1791.
Signals of indicators:
Moving averages
Trading is conducted above 30 and 50 moving averages, which indicates an attempt by the bulls to continue the upward trend in the pair;
Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
Bollinger Bands:
The growth will be limited near the upper level of the indicator 1.4230. If the pair falls, the lower border of the indicator in the area of 1.4130 will provide support.
Description of indicators
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
- MACD indicator (Moving Average Convergence / Divergence - moving average convergence/divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
- Bollinger Bands (Bollinger Bands). Period 20
- Non-profit speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet specific 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 the short and long positions of non-commercial traders.
