To open long positions on EUR/USD, you need:
Several rather profitable signals for entering the market were formed yesterday. Let's take a look at the 5-minute chart and figure out all the entry points. In the first half of the day, the bears protected the resistance at 1.1560 and formed an entry point to short positions from there, which was realized immediately after the release of inflation data in the US. The downward movement was about 30 points. During the US session, the bulls managed to take control of 1.1560, and the reverse test of this level from top to bottom formed an excellent entry point into long positions. As a result, the upward movement was about 30 points.
No important fundamental reports this morning, which will play into the hands of the euro bulls, as they managed to get out of the horizontal channel yesterday. The first challenge is to break through and consolidate above the 1.1611 range. Its downward reversal testifies to a buy signal for the euro, hoping that the pair would recover further to a high like 1.1636. A breakthrough of this range with a similar test from top to bottom will allow the bulls to build a new upward trend with the prospect of EUR/USD strengthening to the 1.1659 area, where I recommend taking profits. The next target will be the high of 1.1684. An equally important task for the bulls in case EUR/USD falls in the first half of the day is to protect the support of 1.1583. Moving averages are just below this level, playing on the bulls' side. Forming a false breakout there creates a good entry point into long positions. In case the bulls are not active, I advise you to postpone long positions to the area of 1.1559, where the lower border of the upward correctional channel formed on the evening of October 12 passes. I advise you to buy EUR/USD immediately on a rebound, counting on an upward correction of 15-20 points only from the lows of 1.1537 and 1.1482.
To open short positions on EUR/USD, you need:
The bears missed the market as they allowed the pair to rise above the upper border of the horizontal channel. All they can count on today is resistance at 1.1611 to be protected. Due to the lack of important fundamental statistics in the first half of the day, it will be quite difficult to do this. Only a false breakout there will return the pressure to the pair, which will push it to the support of 1.1583, on which a lot depends today. A breakthrough and a test of this level from the bottom up will lead to forming a signal to open short positions, which will quickly push EUR/USD to the next level of 1.1559, slightly above which the moving averages are, playing on the side of the bulls. The next target will be the low of 1.1537, but its test will mean the resumption of the bearish market for the euro. In case the bears are not active at 1.1611, it is best to postpone selling until the resistance test at 1.1636, or open short positions immediately on a rebound, counting on a downward correction of 15-20 points from the new high of 1.1659.
I recommend for review:
The Commitment of Traders (COT) report for October 5 revealed a sharp increase in short positions and only a slight increase in long positions, which reduced the net position. A large increase in short positions only confirms the formation of a bear market for the European currency. Political problems in the United States, some of which have already been resolved at the moment, also affected the players' current positions in the report under consideration by the COT. Friday's report from the US Department of Commerce on the labor market (it is not taken into account in this COT report) most likely will not affect the balance of power between bulls and bears, as the data turned out to be rather ambiguous. All this only confirms the preservation of the bullish trend for the US dollar, which will be observed this week as well. The prospect of changes in the Federal Reserve's monetary policy as early as November of this year allows traders to build long dollar positions without much difficulty, as many investors expect the central bank to start cutting back on the bond buying program towards the end of this year. The demand for risky assets will remain limited due to the wait-and-see attitude of the European Central Bank. Last week, ECB President Christine Lagarde talked a lot about how she will continue to adhere to a wait-and-see attitude and keep the stimulus policy at current levels. The COT report indicated that long non-commercial positions rose from 195,043 to 196,819, while short non-commercial positions jumped quite seriously - from 194,171 to 219,153. By the end of the week, the overall non-commercial net position went into the negative zone and dropped from the level of 872 to the level of -22334. The weekly closing price also dropped to 1.1616 from 1.1695.
Trading is carried out above the 30 and 50 daily moving averages, which indicates the construction of a new uptrend for 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.
Growth will be limited by the upper level of the indicator in the area of 1.1615. In the event of a decline, support will be provided by the lower border of the indicator at 1.1555.
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.