EUR/USD: trading plan for the US session on August 7th(Analysis of morning trades). Euro buyers have done everything possible
August 7, 2023 12:22 pm
In my morning forecast, I emphasized the 1.0973 level and recommended using it to make market entry decisions. Let’s examine the 5-minute chart and understand what transpired there. The decline and the false breakout formation at 1.0973 provided a strong buy signal for the euro. However, due to a lack of support from major players, the upward movement was just a little over 20 points before it ended. The technical outlook was revised for the latter half of the day.
To open long positions on EURUSD, consider the following:
In the afternoon, all eyes will be on speeches from Federal Reserve representatives. They are gradually splitting into two camps: one believes that interest rates should be raised until a systematic and consistent reduction in price pressure is observed. The other camp is confident that it’s time to keep rates at their current highs without further increases. Today, we will hear from FOMC members Patrick T. Harker and Michelle Bowman, who advocate for further increases. This may maintain pressure on the euro in the afternoon.
The most interesting action will be after a further decline in EUR/USD to the new support area of 1.0954. Forming a false breakout there will signal a buy with the aim of refreshing resistance at 1.0993, which was established in the first half of the day. A breakout and top-down test of this range, against the backdrop of dovish statements from Federal Reserve representatives, will restore demand for the euro, giving it a chance to return to the peak of 1.1037. The ultimate target remains the 1.1072 area, where I will lock in profits. If the EUR/USD falls and there’s no activity at 1.0954 in the afternoon, it will only increase problems for euro buyers, and the bearish trend will have a chance to return. In such a case, only a false breakout around the next support level at 1.0915 will signal to buy the euro. I will be opening long positions immediately on a rebound from the 1.0871 low with the aim of a 30-35 point intra-day upward correction.
To open short positions on EURUSD, consider the following:
Sellers today still have a chance to maintain the intraday bearish market. The advantage will be on their side as long as trading remains below the 1.0993 mark. This level is very important. In the event of a EUR/USD rise following interviews with Federal Reserve representatives, I plan to open short positions only after a false breakout in the 1.0993 area. This will lead to a drop toward the new support level of 1.0954, formed last Friday. Only after a breakout and consolidation below this range, and also a reverse test from bottom to top, can we get a selling signal, opening a direct path to 1.0915 and 1.0871, which will indicate the formation of a bearish trend. The ultimate target will be the 1.0836 area, where I will take profits. If the EUR/USD rises during the American session and bears are absent at 1.0993, which cannot be ruled out, bulls will try to reclaim their advantage from last Friday, leading to an upward correction at the beginning of the week. In such a development, I will defer short positions until the next resistance at 1.1037. I would also consider selling there, but only after an unsuccessful consolidation. I will open short positions immediately on a rebound from a high of 1.1072, targeting a downward correction of 30-35 points.
The COT (Commitment of Traders) report for July 25th showed a sharp reduction in both long and short positions. This was a clear consequence of the scheduled meetings of the Federal Reserve System and the European Central Bank, the results of which still need to be reflected in these reports. The monetary policy decisions made by the regulator matched economists’ expectations, preserving market equilibrium. This balance was later disrupted by US macroeconomic statistics, indicating the strength of the US economy in the 2nd quarter. However, despite the downward correction, the optimal medium-term strategy under the current conditions remains to buy the euro on the decline. The COT report indicates that long non-commercial positions decreased by 13,867 to 250,647, while short non-commercial positions dropped by 12,265 to 73,417. As a result, the spread between long and short positions increased by 6,350, favoring euro buyers. The closing price decreased, standing at 1.1075 against 1.1300 the previous week.
Indicator Signals:
Moving Averages:
Trading occurs around the 30 and 50-day moving averages, indicating a sideways market character.
Note: The author considers the period and prices of the moving averages on the hourly H1 chart and differ from the general definition of classic daily moving averages on the D1 daily chart.
Bollinger Bands:
In case of an increase, the upper border of the indicator will act as resistance around 1.1037.
Description of the indicators:
• Moving average (determines the current trend by smoothing out volatility and noise). Period 50. Marked in yellow on the chart.
• Moving average (determines the current trend by smoothing out volatility and noise). Period 30. Marked in green on the chart.
• MACD Indicator (Moving Average Convergence/Divergence – convergence/divergence of moving averages) 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, who 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
The material has been provided by InstaForex Company – www.instaforex.com
In my morning forecast, I emphasized the 1.0973 level and recommended using it to make market entry decisions. Let’s examine the 5-minute chart and understand what transpired there. The decline and the false breakout formation at 1.0973 provided a strong buy signal for the euro. However, due to a lack of support from major players, the upward movement was just a little over 20 points before it ended. The technical outlook was revised for the latter half of the day.
To open long positions on EURUSD, consider the following:
In the afternoon, all eyes will be on speeches from Federal Reserve representatives. They are gradually splitting into two camps: one believes that interest rates should be raised until a systematic and consistent reduction in price pressure is observed. The other camp is confident that it’s time to keep rates at their current highs without further increases. Today, we will hear from FOMC members Patrick T. Harker and Michelle Bowman, who advocate for further increases. This may maintain pressure on the euro in the afternoon.
The most interesting action will be after a further decline in EUR/USD to the new support area of 1.0954. Forming a false breakout there will signal a buy with the aim of refreshing resistance at 1.0993, which was established in the first half of the day. A breakout and top-down test of this range, against the backdrop of dovish statements from Federal Reserve representatives, will restore demand for the euro, giving it a chance to return to the peak of 1.1037. The ultimate target remains the 1.1072 area, where I will lock in profits. If the EUR/USD falls and there’s no activity at 1.0954 in the afternoon, it will only increase problems for euro buyers, and the bearish trend will have a chance to return. In such a case, only a false breakout around the next support level at 1.0915 will signal to buy the euro. I will be opening long positions immediately on a rebound from the 1.0871 low with the aim of a 30-35 point intra-day upward correction.
To open short positions on EURUSD, consider the following:
Sellers today still have a chance to maintain the intraday bearish market. The advantage will be on their side as long as trading remains below the 1.0993 mark. This level is very important. In the event of a EUR/USD rise following interviews with Federal Reserve representatives, I plan to open short positions only after a false breakout in the 1.0993 area. This will lead to a drop toward the new support level of 1.0954, formed last Friday. Only after a breakout and consolidation below this range, and also a reverse test from bottom to top, can we get a selling signal, opening a direct path to 1.0915 and 1.0871, which will indicate the formation of a bearish trend. The ultimate target will be the 1.0836 area, where I will take profits. If the EUR/USD rises during the American session and bears are absent at 1.0993, which cannot be ruled out, bulls will try to reclaim their advantage from last Friday, leading to an upward correction at the beginning of the week. In such a development, I will defer short positions until the next resistance at 1.1037. I would also consider selling there, but only after an unsuccessful consolidation. I will open short positions immediately on a rebound from a high of 1.1072, targeting a downward correction of 30-35 points.
The COT (Commitment of Traders) report for July 25th showed a sharp reduction in both long and short positions. This was a clear consequence of the scheduled meetings of the Federal Reserve System and the European Central Bank, the results of which still need to be reflected in these reports. The monetary policy decisions made by the regulator matched economists’ expectations, preserving market equilibrium. This balance was later disrupted by US macroeconomic statistics, indicating the strength of the US economy in the 2nd quarter. However, despite the downward correction, the optimal medium-term strategy under the current conditions remains to buy the euro on the decline. The COT report indicates that long non-commercial positions decreased by 13,867 to 250,647, while short non-commercial positions dropped by 12,265 to 73,417. As a result, the spread between long and short positions increased by 6,350, favoring euro buyers. The closing price decreased, standing at 1.1075 against 1.1300 the previous week.
Indicator Signals:
Moving Averages:
Trading occurs around the 30 and 50-day moving averages, indicating a sideways market character.
Note: The author considers the period and prices of the moving averages on the hourly H1 chart and differ from the general definition of classic daily moving averages on the D1 daily chart.
Bollinger Bands:
In case of an increase, the upper border of the indicator will act as resistance around 1.1037.
Description of the indicators:
• Moving average (determines the current trend by smoothing out volatility and noise). Period 50. Marked in yellow on the chart.
• Moving average (determines the current trend by smoothing out volatility and noise). Period 30. Marked in green on the chart.
• MACD Indicator (Moving Average Convergence/Divergence – convergence/divergence of moving averages) 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, who 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
The material has been provided by InstaForex Company – www.instaforex.com