EUR/USD: plan for the European session on September 1. COT reports. Euro updated another weekly high, but could not grab

To open long positions on EUR/USD, you need:

Several signals to enter the market were formed yesterday. Let's take a look at the 5 minute chart and break down the entry points. Even in the first half of the day after reports on the eurozone were released, and there were quite a lot of them, the euro tried to break above the resistance of 1.1831 and all this led to a false breakout and a sell signal. But if during the European session we did not get a strong downward movement, then a similar situation after a breakout and a return under the level of 1.1831 in the afternoon had resulted in creating another entry point into short positions and to a larger fall to the 1.1809 area. Making it possible to take about 30 points from the market - almost all intraday volatility.

Today is quite an interesting day from the point of view of European fundamental statistics. The bulls can count on the pair's growth, and good data on retail sales in Germany, as well as a series of reports on PMIs in the manufacturing sector of the eurozone countries, will provide help. Towards the middle of the day, we will get acquainted with the unemployment rate in the eurozone, which may drop to 7.6%. But since this figure is for July, it is unlikely that it will significantly affect the market. Against this background, the only thing left for the bulls is to follow the level of 1.1792 and count on the breakthrough of 1.1820. In case the euro falls in the first half of the day, only a false breakout in the 1.1792 area can create a good signal to open long positions in continuation of the upward trend with the key goal of an exit at 1.1820. A more important task is a breakthrough and reverse test from top to bottom of this level, which also forms a buy signal in hopes of a further recovery to 1.1844, where I recommend taking profits. The succeeding target will be the area of 1.1870, but it will only be possible to reach this level if the German retail sales reports turns out to be strong and the US labor market report disappoints, which will be discussed in more detail in the forecast for the second half of the day. In case the bulls are not active in the 1.1792 area, it is possible to open long positions in EUR/USD immediately for a rebound from the support at 1.1769, or even lower - from the level of 1.1747, counting on an upward correction of 15-20 points within the day.

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To open short positions on EUR/USD, you need:

The bears may try to regain control of the market at the very beginning of this month, so it is very important how they show themselves today in the 1.1820 resistance area and what kind of fundamental data will be released for the eurozone. The initial task during the European session is to regain control of the level of 1.1792, and given that trading is being conducted below the moving averages, it is quite possible to do this. Only a breakthrough and a reverse test of this level will return the pressure to the pair and generate a signal to sell the euro in order to renew the 1.1769 low. The succeeding target will be the area of 1.1747, but we can only count on such a powerful downward movement today if we receive weak fundamental statistics on Germany and the eurozone. In case EUR/USD grows further during the European session, only a false breakout at the level of 1.1820 can create the first signal to open short positions in hopes of restoring the bear market. If there is no activity there, it is best to postpone short positions until the test of the larger resistance at 1.1844, and I recommend selling the pair immediately on a rebound counting on a downward correction of 15-20 points only from a new weekly high of 1.1870.

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I recommend that you familiarize yourself with:

The Commitment of Traders (COT) report for August 24 showed a clear decline in long positions and only a slight decline in short ones. All this before an important speech from Federal Reserve Chairman Jerome Powell in Jackson Hole. Many traders feared that he would announce more aggressive actions by the central bank to cut the bond buying program, and therefore, they tried to get rid of risky long positions in the euro. However, this did not happen and the euro moved up at the end of the week, renewing local highs. However, the demand for such assets is limited due to the lack of benchmarks caused by the rather high probability of another wave of the spread of the coronavirus, and the new "Delta" strain. All this will force the European Central Bank to continue to adhere to a wait-and-see attitude and maintain the stimulating policy at current levels, which limits the pair's upward potential. The COT report indicated that long non-commercial positions fell from 233,529 to 194,169, while short non-commercial positions fell from 175,889 to 169,539. By the end of the week, the total non-commercial net position immediately fell to 24,630 from the level of 57,640. The weekly closing price also dropped from 1.1777 to 1.1744.

Indicator signals:

Moving averages

Trading is carried out below 30 and 50 moving averages, which indicates the likelihood of a downward correction in the euro.

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 breakthrough of the lower border of the indicator in the area of 1.1792 will lead to a fall in the pair. Surpassing the upper border of the indicator around 1.1840 will lead to a new wave of euro growth.

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.
The material has been provided by InstaForex Company - www.instaforex.com

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