To open long positions on EURUSD, you need:
Despite the low volatility of the market against the background of the lack of fundamental data and further guidance, several signals were formed to buy the euro. Let's look at the 5-minute chart and figure out what happened. Exactly according to the scenario, as I described this morning, the formation of a false breakdown at the level of 1.1267 led to the formation of a signal to buy the euro. And although there was no strong upward movement, as a result, the pair passed 25 points from the entry point – and this with daily volatility of 29. From a technical point of view, nothing has changed for the second half of the day, and most likely, trading will continue around the 1.1267 level.
Data on consumer confidence in the eurozone may put pressure on the euro, so it is best to wait for another downward correction and a false breakdown in the area of 1.1267. Only such a scenario will lead to the formation of an entry point into the market. Larger players will show themselves only at the new low - 1.1222, which will be able to contain the pressure of sellers after updating the lows of last week. In the formation of a false breakdown, there will be an additional signal to open long positions. However, to return the upward correction, the bulls need to go beyond the resistance of 1.1318, where the moving averages are playing on the sellers' side. Strong data on the eurozone consumer confidence indicator and a speech by the representative of the European Central Bank, Luis de Guindos, can help with the implementation of such a scenario. However, only the reverse test of 1.1318 from top to bottom will give an entry point to long positions in the expectation of growth in the area of 1.1369. A breakthrough in this area with a similar top-down test will lead to an additional buy signal and growth in the area of 1.1417, where I recommend fixing the profits. In case of another large sale of EUR/USD in the afternoon and the absence of buyers at 1.2222, I advise you to wait for the formation of a false breakdown in the area of 1.1193. It is possible to open long positions on EUR/USD immediately for a rebound from the minimum of 1.1155, or even lower - from 1.1106, counting on a correction of 15-20 points within a day.
To open short positions on EURUSD, you need:
Bears can't do anything with the 1.1267 level yet, and most likely they just don't want to. Negative news about coronavirus infection in the EU may increase pressure on the pair. The primary task remains to break through and consolidate below the 1.1267 level, which sellers have repeatedly tested today during the European session. Weak data on the eurozone may increase pressure on EUR/USD, and a breakthrough and a reverse test of 1.1267 from the bottom up will lead to a new sell signal and a further sell-off to the area of the 1.1222 minimum. If we do not see bull activity at 1.1222, it is better to continue to increase short positions to further decrease to the lows of 1.1193 and 1.1155, where I recommend fixing the profits. In the scenario of EUR/USD growth this afternoon, I advise you to focus on the resistance of 1.1318, where the moving averages are playing on the sellers' side. The formation of a false breakdown at this level will be exactly what sellers need right now. An unsuccessful consolidation above this range will lead to the formation of a signal to open short positions in the continuation of the downward trend. Under the scenario of euro growth during the American session and the absence of bear activity in the area of 1.1318, I advise you to postpone sales until the test of the next resistance of 1.1369. But even there, it is best to open short positions after the formation of a false breakdown. The best option for selling EUR/USD immediately for a rebound will be a maximum in the area of 1.1417. You can count on a downward correction of 15-20 points.
The COT report (Commitment of Traders) for November 9 recorded a reduction in short positions and a slight increase in long ones, which led to the return of a positive delta. The fact of high inflationary pressure in the US continues to support the US dollar, as many investors are counting on an earlier increase in interest rates by the Federal Reserve next year and are already winning back the market in this direction by buying the US dollar. The statements of representatives of the Central Bank, which have been heard recently, only confirm the expectations of market participants. At the same time, the president of the European Central Bank, Christine Lagarde, confidently insists that the ultra-soft monetary policy will not change even next year – this puts some pressure on buyers of risky assets who were counting on a more active recovery of the euro. In the near future, we will get acquainted with important data on retail sales in the United States and the unemployment rate in the eurozone, which will shed light on further actions by regulators to stimulate the economies of their countries. The latest November COT report indicated that long non-profit positions increased from the level of 191,496 to the level of 192,544, while short non-profit positions decreased from the level of 197,634 to the level of 188,771. At the end of the week, the total non-commercial net position became positive and amounted to 3,773 against -6,138. The weekly closing price decreased quite slightly, to the level of 1.1587 against 1.1599.
Signals of indicators:
Moving averages
Trading is below 30 and 50 daily moving averages, which indicates the resumption of the bear market.
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
A breakthrough of the upper limit of the indicator in the area of 1.1300 will lead to an increase in the euro. A breakthrough of the lower limit of the indicator in the area of 1.1265 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. 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 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 the short and long positions of non-commercial traders.
