EUR/USD: trading plan for the US session on July 20th (analysis of morning trades). Euro takes a pause
July 20, 2023 12:23 pm
In my morning forecast, I highlighted the level of 1.1228 and recommended using it as a basis for trading decisions. Let’s examine the 5-minute chart and analyze the events. Due to the low market volatility, we didn’t reach the levels mentioned in the morning forecast, resulting in no signals to enter the market.
To initiate long positions on EUR/USD, the following conditions are necessary:
The absence of significant fundamental statistics for the Eurozone has impacted market volume and volatility. Now, the focus is on the second half of the day, when several reports on the US labor market will be released. The market awaits data on the weekly number of initial jobless claims and the Federal Reserve Bank of Philadelphia’s manufacturing index. Additionally, attention will be paid to the volume of home sales in the secondary market in the US, which is highly dependent on borrowing costs and is currently reaching record levels for the country. Positive statistics may increase pressure on the euro, leading to downward movement towards the nearest support level at 1.1184.
A false breakout formation at this level will signal a buying opportunity, continuing the upward trend and pushing the price upward toward the mid-range of the sideways channel at 1.1228 – a level where the moving averages support bearish sentiment. A successful breakthrough and testing of this range from top to bottom will reinforce demand for the euro, providing an opportunity to reach a new annual high at 1.1274. The ultimate target remains at 1.1310, where I plan to make a profit. However, if EUR/USD declines and there’s little activity around 1.1184 in the second half of the day, buyers may face difficulties, and weak data from the Eurozone will further increase the pressure on EUR/USD. Therefore, a false breakout formation around the next support level at 1.1139 will be a signal to buy the euro. I will initiate long positions starting from the minimum of 1.1091, aiming for an upward correction of 30-35 points within the day.
To initiate short positions on EUR/USD, the following conditions are necessary:
Sellers still have an opportunity to continue building a downward correction. Their primary target is to defend the mid-range of the sideways channel around 1.1228. I prefer to act from this level only after observing growth and a false breakout, providing a signal to sell with the prospect of a decline in EUR/USD towards the new support level at 1.1184, which formed after yesterday’s trades. At this level, I expect larger buyers to enter the market. In the case of a breakthrough and consolidation below this range, along with strong statistics on the US labor market and a reverse test from bottom to top, a signal to sell will be generated, setting a direct path towards 1.1139. This would indicate a significant correction in the euro, potentially restoring the buyer’s appetite. The ultimate target would be the area of 1.1091, where I intend to make a profit.
In the case of EUR/USD moving upward during the American session and a lack of bearish pressure at 1.1228, which cannot be ruled out, bulls will regain market control. In this scenario, I will postpone short positions until the next resistance level at 1.1274. Selling may also be considered there, but only after an unsuccessful breakout. I will initiate short positions starting from the maximum of 1.1310, targeting a downward correction of 30-35 pips.
The COT report (Commitment of Traders) for July 11th indicated an increase in long and short positions, leaving the market balance unchanged in favor of euro buyers. The released data on inflation in the US, showing a significant slowdown, especially in core prices, significantly impacted euro buyers, resulting in a surge and a new yearly high beyond the psychological level of 1.1000, which hadn’t been reached for almost half a year. The fact that the Federal Reserve no longer needs to raise interest rates makes the US dollar relatively weak. Buying the euro on declines remains the optimal medium-term strategy in the bullish market. According to the COT report, non-commercial long positions increased by 3,079 to 223,351, while non-commercial short positions rose by 5,754 to 84,189. At the end of the week, the total non-commercial net position slightly decreased to 140,162 from 142,837. The weekly closing price increased to 1.1037 from 1.0953.
Indicators’ signals:
Moving Averages:
Trading is slightly below the 30-day and 50-day moving averages, indicating market uncertainty.
Note: The author considers the period and prices of moving averages on the hourly chart (H1), which differs from the general definition of classical daily moving averages on the daily chart (D1).
Bollinger Bands:
In the case of an upward trend, the upper boundary of the indicator around 1.1228 will act as resistance.
Indicators’ Descriptions:
• Moving Average (determines the current trend by smoothing volatility and noise). Period – 50. Marked in yellow on the chart;
• Moving Average (determines the current trend by smoothing volatility and noise). Period – 30. Marked in green on the chart;
• MACD (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 using the futures market for speculative purposes and meeting specific requirements;
• Non-commercial long positions represent the total long open positions of non-commercial traders;
• Non-commercial short positions represent the total short open positions 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 forecast, I highlighted the level of 1.1228 and recommended using it as a basis for trading decisions. Let’s examine the 5-minute chart and analyze the events. Due to the low market volatility, we didn’t reach the levels mentioned in the morning forecast, resulting in no signals to enter the market.
To initiate long positions on EUR/USD, the following conditions are necessary:
The absence of significant fundamental statistics for the Eurozone has impacted market volume and volatility. Now, the focus is on the second half of the day, when several reports on the US labor market will be released. The market awaits data on the weekly number of initial jobless claims and the Federal Reserve Bank of Philadelphia’s manufacturing index. Additionally, attention will be paid to the volume of home sales in the secondary market in the US, which is highly dependent on borrowing costs and is currently reaching record levels for the country. Positive statistics may increase pressure on the euro, leading to downward movement towards the nearest support level at 1.1184.
A false breakout formation at this level will signal a buying opportunity, continuing the upward trend and pushing the price upward toward the mid-range of the sideways channel at 1.1228 – a level where the moving averages support bearish sentiment. A successful breakthrough and testing of this range from top to bottom will reinforce demand for the euro, providing an opportunity to reach a new annual high at 1.1274. The ultimate target remains at 1.1310, where I plan to make a profit. However, if EUR/USD declines and there’s little activity around 1.1184 in the second half of the day, buyers may face difficulties, and weak data from the Eurozone will further increase the pressure on EUR/USD. Therefore, a false breakout formation around the next support level at 1.1139 will be a signal to buy the euro. I will initiate long positions starting from the minimum of 1.1091, aiming for an upward correction of 30-35 points within the day.
To initiate short positions on EUR/USD, the following conditions are necessary:
Sellers still have an opportunity to continue building a downward correction. Their primary target is to defend the mid-range of the sideways channel around 1.1228. I prefer to act from this level only after observing growth and a false breakout, providing a signal to sell with the prospect of a decline in EUR/USD towards the new support level at 1.1184, which formed after yesterday’s trades. At this level, I expect larger buyers to enter the market. In the case of a breakthrough and consolidation below this range, along with strong statistics on the US labor market and a reverse test from bottom to top, a signal to sell will be generated, setting a direct path towards 1.1139. This would indicate a significant correction in the euro, potentially restoring the buyer’s appetite. The ultimate target would be the area of 1.1091, where I intend to make a profit.
In the case of EUR/USD moving upward during the American session and a lack of bearish pressure at 1.1228, which cannot be ruled out, bulls will regain market control. In this scenario, I will postpone short positions until the next resistance level at 1.1274. Selling may also be considered there, but only after an unsuccessful breakout. I will initiate short positions starting from the maximum of 1.1310, targeting a downward correction of 30-35 pips.
The COT report (Commitment of Traders) for July 11th indicated an increase in long and short positions, leaving the market balance unchanged in favor of euro buyers. The released data on inflation in the US, showing a significant slowdown, especially in core prices, significantly impacted euro buyers, resulting in a surge and a new yearly high beyond the psychological level of 1.1000, which hadn’t been reached for almost half a year. The fact that the Federal Reserve no longer needs to raise interest rates makes the US dollar relatively weak. Buying the euro on declines remains the optimal medium-term strategy in the bullish market. According to the COT report, non-commercial long positions increased by 3,079 to 223,351, while non-commercial short positions rose by 5,754 to 84,189. At the end of the week, the total non-commercial net position slightly decreased to 140,162 from 142,837. The weekly closing price increased to 1.1037 from 1.0953.
Indicators’ signals:
Moving Averages:
Trading is slightly below the 30-day and 50-day moving averages, indicating market uncertainty.
Note: The author considers the period and prices of moving averages on the hourly chart (H1), which differs from the general definition of classical daily moving averages on the daily chart (D1).
Bollinger Bands:
In the case of an upward trend, the upper boundary of the indicator around 1.1228 will act as resistance.
Indicators’ Descriptions:
• Moving Average (determines the current trend by smoothing volatility and noise). Period – 50. Marked in yellow on the chart;
• Moving Average (determines the current trend by smoothing volatility and noise). Period – 30. Marked in green on the chart;
• MACD (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 using the futures market for speculative purposes and meeting specific requirements;
• Non-commercial long positions represent the total long open positions of non-commercial traders;
• Non-commercial short positions represent the total short open positions 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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