EUR/USD: trading plan for the US session on August 21st (analysis of morning deals). The euro continues to recover
August 21, 2023 1:23 pm
In my morning forecast, I drew attention to the 1.0887 level and recommended making market entry decisions based on it. Let’s look at the 5-minute chart and analyze what happened. Growth and the formation of a false breakout at this level led to a sell signal. However, a significant drop did not occur, after which euro buyers managed to break above 1.0887. For this reason, the technical picture was revised for the second half of the day.
For opening long positions on EUR/USD, it is necessary:
The absence of statistics from the Eurozone and the US today, as well as low trading volumes, leave chances for euro buyers to build an upward correction. However, in the current situation, I will not rush to act with purchases at highs. I will better wait for a decrease and the formation of a false breakout in the area of the new support at 1.0882, where the moving averages, favoring bulls, pass. This will provide an appropriate entry point for buying into the development of an upward correction at the beginning of the week, to update the resistance at 1.0916. A breakout and a top-down test of this range will strengthen demand for the euro, giving a chance for an upward surge and renewal of 1.0951. The ultimate target remains the 1.0982 area, where I will lock in profits. In the event of a decrease in EUR/USD and a lack of activity at 1.0882 in the second half of the day, which is quite possible as the trend remains bearish, pressure on the pair will only increase. In this case, only the formation of a false breakout in the area of the next support at 1.0847 – a new monthly low, will signal the purchase of the euro. I will open long positions immediately on a rebound from 1.0808 with the aim of an upward correction of 30-35 points within the day.
For opening short positions on EUR/USD, it is necessary:
Sellers tried, but nothing worked. In the absence of fundamental statistics from the US, there will be even fewer willing to enter the market. It is better to act at the beginning of the week after growth and the formation of a false breakout in the area of the nearest resistance at 1.0916, from which the euro fell well last Thursday. This will lead to a sell signal in the continuation of the bear market and a fall of the pair in the area of the new support at 1.0882. Only after breaking through and consolidating below this range, and also after a reverse bottom-up test, can a sell signal be received, opening a direct path to a new minimum of 1.0847. The ultimate target will be the 1.0808 area, which will indicate the continuation of the formation of a bearish trend. There I will lock in profits. In the event of an upward movement of EUR/USD during the American session and the absence of bears at 1.0916, which cannot be ruled out, the bulls will try to re-enter the market. In such a development of events, I will postpone short positions until the next resistance at 1.0951. It is also possible to sell, but only after unsuccessful consolidation. I will open short positions immediately on a rebound from the maximum of 1.0982 with the aim of a downward correction of 30-35 points.
In the COT (Commitment of Traders) report for August 8th, there was a decrease in long positions and an increase in short positions. All this occurred before the release of quite important inflation data in the US, which, in theory, should have helped determine the future policy of the Federal Reserve System. However, this did not happen, as prices in the US rose again in July of this year, maintaining the basis for further rate hikes by the regulator. Nevertheless, the decline in the euro is quite an attractive moment, as, despite this, the optimal medium-term strategy under the current conditions remains the purchase of risk assets on the decline. The COT report indicates that long non-commercial positions decreased by 12,026 to a level of 228,048, while short non-commercial positions grew by 10,225 to a level of 78,237. As a result, the spread between long and short positions narrowed by 1,891. The closing price was 1.0981, compared to 1.0999 a week earlier.
Indicator signals:
Moving averages
Trading is taking place above the 30 and 50-day moving averages, indicating an attempt by the bulls to break the market.
Note: The period and prices of moving averages are considered by the author on an hourly chart H1 and differ from the general definition of classical daily moving averages on the daily chart D1.
Bollinger Bands
In the case of growth, the upper boundary of the indicator in the area of 1.0899 will act as resistance.
Description of indicators
• Moving average (determines the current trend by smoothing volatility and noise). Period 50. Marked on the chart in yellow.
• Moving average (determines the current trend by smoothing volatility and noise). Period 30. Marked on the chart in green.
• MACD (Moving Average Convergence/Divergence) indicator. Fast EMA period 12. Slow EMA period 26. SMA period 9.
• Bollinger Bands. Period 20.
• Non-commercial traders – speculators, 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.
• The total non-commercial net position is the difference between the short and long positions of non-commercial traders.
The material has been provided by InstaForex Company – www.instaforex.com
In my morning forecast, I drew attention to the 1.0887 level and recommended making market entry decisions based on it. Let’s look at the 5-minute chart and analyze what happened. Growth and the formation of a false breakout at this level led to a sell signal. However, a significant drop did not occur, after which euro buyers managed to break above 1.0887. For this reason, the technical picture was revised for the second half of the day.
For opening long positions on EUR/USD, it is necessary:
The absence of statistics from the Eurozone and the US today, as well as low trading volumes, leave chances for euro buyers to build an upward correction. However, in the current situation, I will not rush to act with purchases at highs. I will better wait for a decrease and the formation of a false breakout in the area of the new support at 1.0882, where the moving averages, favoring bulls, pass. This will provide an appropriate entry point for buying into the development of an upward correction at the beginning of the week, to update the resistance at 1.0916. A breakout and a top-down test of this range will strengthen demand for the euro, giving a chance for an upward surge and renewal of 1.0951. The ultimate target remains the 1.0982 area, where I will lock in profits. In the event of a decrease in EUR/USD and a lack of activity at 1.0882 in the second half of the day, which is quite possible as the trend remains bearish, pressure on the pair will only increase. In this case, only the formation of a false breakout in the area of the next support at 1.0847 – a new monthly low, will signal the purchase of the euro. I will open long positions immediately on a rebound from 1.0808 with the aim of an upward correction of 30-35 points within the day.
For opening short positions on EUR/USD, it is necessary:
Sellers tried, but nothing worked. In the absence of fundamental statistics from the US, there will be even fewer willing to enter the market. It is better to act at the beginning of the week after growth and the formation of a false breakout in the area of the nearest resistance at 1.0916, from which the euro fell well last Thursday. This will lead to a sell signal in the continuation of the bear market and a fall of the pair in the area of the new support at 1.0882. Only after breaking through and consolidating below this range, and also after a reverse bottom-up test, can a sell signal be received, opening a direct path to a new minimum of 1.0847. The ultimate target will be the 1.0808 area, which will indicate the continuation of the formation of a bearish trend. There I will lock in profits. In the event of an upward movement of EUR/USD during the American session and the absence of bears at 1.0916, which cannot be ruled out, the bulls will try to re-enter the market. In such a development of events, I will postpone short positions until the next resistance at 1.0951. It is also possible to sell, but only after unsuccessful consolidation. I will open short positions immediately on a rebound from the maximum of 1.0982 with the aim of a downward correction of 30-35 points.
In the COT (Commitment of Traders) report for August 8th, there was a decrease in long positions and an increase in short positions. All this occurred before the release of quite important inflation data in the US, which, in theory, should have helped determine the future policy of the Federal Reserve System. However, this did not happen, as prices in the US rose again in July of this year, maintaining the basis for further rate hikes by the regulator. Nevertheless, the decline in the euro is quite an attractive moment, as, despite this, the optimal medium-term strategy under the current conditions remains the purchase of risk assets on the decline. The COT report indicates that long non-commercial positions decreased by 12,026 to a level of 228,048, while short non-commercial positions grew by 10,225 to a level of 78,237. As a result, the spread between long and short positions narrowed by 1,891. The closing price was 1.0981, compared to 1.0999 a week earlier.
Indicator signals:
Moving averages
Trading is taking place above the 30 and 50-day moving averages, indicating an attempt by the bulls to break the market.
Note: The period and prices of moving averages are considered by the author on an hourly chart H1 and differ from the general definition of classical daily moving averages on the daily chart D1.
Bollinger Bands
In the case of growth, the upper boundary of the indicator in the area of 1.0899 will act as resistance.
Description of indicators
• Moving average (determines the current trend by smoothing volatility and noise). Period 50. Marked on the chart in yellow.
• Moving average (determines the current trend by smoothing volatility and noise). Period 30. Marked on the chart in green.
• MACD (Moving Average Convergence/Divergence) indicator. Fast EMA period 12. Slow EMA period 26. SMA period 9.
• Bollinger Bands. Period 20.
• Non-commercial traders – speculators, 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.
• The total non-commercial net position is the difference between the short and long positions of non-commercial traders.
The material has been provided by InstaForex Company – www.instaforex.com
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