EUR/USD: trading plan for the US session on July 12 (analysis of morning deals). The whole focus is on American inflation
July 12, 2023 11:23 am
In my morning analysis, I pointed out the 1.1016 level and advised considering it for market entry. Let’s delve into the 5-minute chart and understand what occurred. Considering the volatility of 17 points in the first part of the day, the opportunities for entry points were minimal. We didn’t manage to reach 1.1016, leaving me without signals. Given the specific data, I slightly adjusted the technical outlook for the latter part of the day.
For initiating long positions on EUR/USD:
Significant inflation data from the US will be released during the American session, potentially causing a spike in volatility and a directed market move. Should the core inflation fail to meet economists’ expectations and remain high, the EUR/USD could fall. However, if prices display a significant decrease in June this year, one might consider betting on the further progress of the bullish trend for EUR/USD and the long-anticipated stabilization above 1.1000.
In the event of a pair’s decrease due to strong data, I would lean towards taking action around the 1.1006 support level, where the moving averages lie, favoring the bulls. The formation of a false breakout at this level will serve as a buying signal, indicating the presence of major market players who could propel the euro to new peaks toward the substantial resistance of 1.1051. A breach and test of this range from top to bottom would bolster demand for the euro, providing an opportunity to reach 1.1090. The ultimate target remains the 1.1129 zone, indicating the establishment of a new upward trend for the euro. I would secure profits at that point. If the EUR/USD falls and there are no buyers at 1.1006 during the US session, and considering that the Fed is still planning to raise rates, the bears could be more proactive in anticipating a downward correction. Therefore, only the formation of a false breakout around the next support of 1.0981 would serve as a buy signal for the euro. I would immediately open long positions on a rebound from the 1.0946 low with a target of an upward correction of 30-35 points within the day.
For initiating short positions on EUR/USD:
Sellers aren’t pushing events and are clearly prepared to act based on the received data – especially considering the highs the euro is at and how overbought it is. The main task will be to defend the new resistance of 1.1051, a test of which may occur after the release of inflation data. Only the formation of a false breakout there will indicate the presence of major bears in the market, creating a signal to sell with a perspective of lowering EUR/USD to the support of 1.1006. Consolidation below this range, as well as a reverse test from bottom to top – the direct way to 1.0981. The farthest target will be the minimum of 1.0946, where I will secure the profit. In the case of an upward movement of EUR/USD during the American session and the absence of bears at 1.1051, which is most likely to happen, the situation will remain under the control of buyers. In such a case, I will postpone short positions to the next resistance of 1.1090. You can also sell there, but only after a failed consolidation. I will open short positions immediately on a rebound from the maximum of 1.1129 with the target of a downward correction of 30-35 points.
In the COT report (Commitment of Traders) for July 3, a reduction in long and short positions was observed, which left the balance of power in the market almost unchanged. The released US labor market data indicate the first signs of cooling, which plays on the side of buyers of risk assets, expecting from their countries’ central banks a further aggressive monetary policy, which cannot be said about the Federal Reserve System. Many believe that the expected Fed rate hikes are already factored into the quotes, and any data indicating a decrease in price pressure could lead to a larger dollar sell-off. The optimal medium-term strategy in the current conditions remains buying euros on the decline. The COT report states that non-commercial long positions fell by 2,705 to a level of 221,272, while non-commercial short positions fell by 514 to a level of 78,435. As a result of the week, the overall non-commercial net position slightly decreased and amounted to 142,837 against 145,028. The weekly closing price fell and amounted to 1.0953 against 1.1006.
Indicator signals:
Moving averages
Trading above 30 and 50-day moving averages, indicating further pair growth.
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 classical daily moving averages on the daily chart D1.
Bollinger Bands
In case of growth, the upper border of the indicator will act as resistance in the region of 1.1040.
Description of Indicators
• Moving Average (smoothing the volatility and noise to identify the current trend). Period 50. It is marked in yellow on the chart.
• Moving Average (smoothing the volatility and noise to identify the current trend). Period 30. It is 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 that use the futures market for speculative purposes and meet certain requirements.
• Non-commercial long positions represent the total open long position of non-commercial traders.
• Non-commercial short positions represent the total open short position of non-commercial traders.
• The total non-commercial net position is the difference between non-commercial traders’ short and long positions.
The material has been provided by InstaForex Company – www.instaforex.com
In my morning analysis, I pointed out the 1.1016 level and advised considering it for market entry. Let’s delve into the 5-minute chart and understand what occurred. Considering the volatility of 17 points in the first part of the day, the opportunities for entry points were minimal. We didn’t manage to reach 1.1016, leaving me without signals. Given the specific data, I slightly adjusted the technical outlook for the latter part of the day.
For initiating long positions on EUR/USD:
Significant inflation data from the US will be released during the American session, potentially causing a spike in volatility and a directed market move. Should the core inflation fail to meet economists’ expectations and remain high, the EUR/USD could fall. However, if prices display a significant decrease in June this year, one might consider betting on the further progress of the bullish trend for EUR/USD and the long-anticipated stabilization above 1.1000.
In the event of a pair’s decrease due to strong data, I would lean towards taking action around the 1.1006 support level, where the moving averages lie, favoring the bulls. The formation of a false breakout at this level will serve as a buying signal, indicating the presence of major market players who could propel the euro to new peaks toward the substantial resistance of 1.1051. A breach and test of this range from top to bottom would bolster demand for the euro, providing an opportunity to reach 1.1090. The ultimate target remains the 1.1129 zone, indicating the establishment of a new upward trend for the euro. I would secure profits at that point. If the EUR/USD falls and there are no buyers at 1.1006 during the US session, and considering that the Fed is still planning to raise rates, the bears could be more proactive in anticipating a downward correction. Therefore, only the formation of a false breakout around the next support of 1.0981 would serve as a buy signal for the euro. I would immediately open long positions on a rebound from the 1.0946 low with a target of an upward correction of 30-35 points within the day.
For initiating short positions on EUR/USD:
Sellers aren’t pushing events and are clearly prepared to act based on the received data – especially considering the highs the euro is at and how overbought it is. The main task will be to defend the new resistance of 1.1051, a test of which may occur after the release of inflation data. Only the formation of a false breakout there will indicate the presence of major bears in the market, creating a signal to sell with a perspective of lowering EUR/USD to the support of 1.1006. Consolidation below this range, as well as a reverse test from bottom to top – the direct way to 1.0981. The farthest target will be the minimum of 1.0946, where I will secure the profit. In the case of an upward movement of EUR/USD during the American session and the absence of bears at 1.1051, which is most likely to happen, the situation will remain under the control of buyers. In such a case, I will postpone short positions to the next resistance of 1.1090. You can also sell there, but only after a failed consolidation. I will open short positions immediately on a rebound from the maximum of 1.1129 with the target of a downward correction of 30-35 points.
In the COT report (Commitment of Traders) for July 3, a reduction in long and short positions was observed, which left the balance of power in the market almost unchanged. The released US labor market data indicate the first signs of cooling, which plays on the side of buyers of risk assets, expecting from their countries’ central banks a further aggressive monetary policy, which cannot be said about the Federal Reserve System. Many believe that the expected Fed rate hikes are already factored into the quotes, and any data indicating a decrease in price pressure could lead to a larger dollar sell-off. The optimal medium-term strategy in the current conditions remains buying euros on the decline. The COT report states that non-commercial long positions fell by 2,705 to a level of 221,272, while non-commercial short positions fell by 514 to a level of 78,435. As a result of the week, the overall non-commercial net position slightly decreased and amounted to 142,837 against 145,028. The weekly closing price fell and amounted to 1.0953 against 1.1006.
Indicator signals:
Moving averages
Trading above 30 and 50-day moving averages, indicating further pair growth.
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 classical daily moving averages on the daily chart D1.
Bollinger Bands
In case of growth, the upper border of the indicator will act as resistance in the region of 1.1040.
Description of Indicators
• Moving Average (smoothing the volatility and noise to identify the current trend). Period 50. It is marked in yellow on the chart.
• Moving Average (smoothing the volatility and noise to identify the current trend). Period 30. It is 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 that use the futures market for speculative purposes and meet certain requirements.
• Non-commercial long positions represent the total open long position of non-commercial traders.
• Non-commercial short positions represent the total open short position of non-commercial traders.
• The total non-commercial net position is the difference between non-commercial traders’ short and long positions.
The material has been provided by InstaForex Company – www.instaforex.com
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