EUR/USD: trading plan for the US session on September 4th (analysis of morning deals). Euro keeps chances of recovery
September 4, 2023 1:23 pm
In my morning forecast, I emphasized the level of 1.0806 and recommended making trading decisions based on it. Let’s look at the 5-minute chart and analyze what happened there. The rise and the false breakout at this level led to a selling signal that continues Friday’s trend. However, the downward movement was only about 13 points, after which the demand for the euro returned, if one can say so. The technical picture remained unchanged for the second half of the day.
To open long positions on EUR/USD, the following is required:
Today is a holiday in the US, so volatility will be quite limited. Yes, ahead of us, there are still several speeches by representatives of the European Central Bank, so we can expect a more active movement of the pair towards strengthening the European currency during this period. However, for trading, I will stick to the morning scenario: I will act on a decline after the formation of a false breakout in the new support area at 1.0772. Divergence on the MACD indicator during the test of 1.0772 will confirm the correct entry point for long positions with the target of recovery to the 1.0806 level, formed following last Friday’s close. A breakthrough and a top-down test of this range against the backdrop of hawkish statements by European politicians will strengthen demand for the euro, providing an opportunity to jump to 1.0833, where the moving averages, favoring sellers, intersect. The furthest target will be the area of 1.0854, where I will take profits. In the event of a decline in EUR/USD and the absence of activity at 1.0772 in the second half of the day, bears will maintain control over the market. In this case, only the formation of a false breakout around 1.0734 will signal a euro buy. I will consider opening long positions from the 1.0705 level with the target of a 30-35 point intraday correction.
To open short positions on EUR/USD, the following is required:
Sellers attempted, but nothing came of it. However, it is worth noting that they managed to defend 1.0806, which maintains market equilibrium. The cautious tone of European politicians will allow bears to protect 1.0806. In the second half of the day, a false breakout like the one I discussed earlier will give a selling signal, opening the way to the new support area at 1.0772. Only after breaking and settling below this range, as well as a bottom-up retest, do I expect to receive another selling signal with the target of reaching 1.0734, where I anticipate the presence of larger buyers. The ultimate target will be the area of 1.0705, where I will take profits. In the event of an upward movement of EUR/USD during the American session and the absence of bears at 1.0806, the bulls will gain the upper hand. In this scenario, I will postpone short positions until the new resistance at 1.0833. Selling there is also possible, but only after an unsuccessful consolidation. I will consider opening short positions from the maximum at 1.0854 with a 30-35 point downward correction target.
The COT report (Commitment of Traders) for August 22nd showed an increase in both long and short positions. Considering the release of rather poor PMI index statistics for the US, indicating economic contraction, and hawkish comments made at the Jackson Hole Symposium by Federal Reserve Chair Jerome Powell, it’s not surprising that there were slightly more short positions than long ones. However, paradoxically, the euro’s decline presents an attractive opportunity, and the optimal medium-term strategy in the current conditions remains to buy risk assets on the decline. The COT report indicates that long non-commercial positions increased by 6,925 to 239,391, while short non-commercial positions jumped by 8,028 to 80,028. As a result, the spread between long and short positions decreased by 3,173. The closing price decreased to 1.0866 from 1.0922, indicating a bearish market.
Indicator Signals:
Moving Averages
Trading is conducted below the 30 and 50-day moving averages, indicating a bearish market character.
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 case of an upward movement, the upper boundary of the indicator around 1.0806 will act as resistance.
Indicator 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 Indicator (Moving Average Convergence/Divergence) 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 certain requirements.
• Long non-commercial positions represent the total long open positions of non-commercial traders.
• Short non-commercial 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 emphasized the level of 1.0806 and recommended making trading decisions based on it. Let’s look at the 5-minute chart and analyze what happened there. The rise and the false breakout at this level led to a selling signal that continues Friday’s trend. However, the downward movement was only about 13 points, after which the demand for the euro returned, if one can say so. The technical picture remained unchanged for the second half of the day.
To open long positions on EUR/USD, the following is required:
Today is a holiday in the US, so volatility will be quite limited. Yes, ahead of us, there are still several speeches by representatives of the European Central Bank, so we can expect a more active movement of the pair towards strengthening the European currency during this period. However, for trading, I will stick to the morning scenario: I will act on a decline after the formation of a false breakout in the new support area at 1.0772. Divergence on the MACD indicator during the test of 1.0772 will confirm the correct entry point for long positions with the target of recovery to the 1.0806 level, formed following last Friday’s close. A breakthrough and a top-down test of this range against the backdrop of hawkish statements by European politicians will strengthen demand for the euro, providing an opportunity to jump to 1.0833, where the moving averages, favoring sellers, intersect. The furthest target will be the area of 1.0854, where I will take profits. In the event of a decline in EUR/USD and the absence of activity at 1.0772 in the second half of the day, bears will maintain control over the market. In this case, only the formation of a false breakout around 1.0734 will signal a euro buy. I will consider opening long positions from the 1.0705 level with the target of a 30-35 point intraday correction.
To open short positions on EUR/USD, the following is required:
Sellers attempted, but nothing came of it. However, it is worth noting that they managed to defend 1.0806, which maintains market equilibrium. The cautious tone of European politicians will allow bears to protect 1.0806. In the second half of the day, a false breakout like the one I discussed earlier will give a selling signal, opening the way to the new support area at 1.0772. Only after breaking and settling below this range, as well as a bottom-up retest, do I expect to receive another selling signal with the target of reaching 1.0734, where I anticipate the presence of larger buyers. The ultimate target will be the area of 1.0705, where I will take profits. In the event of an upward movement of EUR/USD during the American session and the absence of bears at 1.0806, the bulls will gain the upper hand. In this scenario, I will postpone short positions until the new resistance at 1.0833. Selling there is also possible, but only after an unsuccessful consolidation. I will consider opening short positions from the maximum at 1.0854 with a 30-35 point downward correction target.
The COT report (Commitment of Traders) for August 22nd showed an increase in both long and short positions. Considering the release of rather poor PMI index statistics for the US, indicating economic contraction, and hawkish comments made at the Jackson Hole Symposium by Federal Reserve Chair Jerome Powell, it’s not surprising that there were slightly more short positions than long ones. However, paradoxically, the euro’s decline presents an attractive opportunity, and the optimal medium-term strategy in the current conditions remains to buy risk assets on the decline. The COT report indicates that long non-commercial positions increased by 6,925 to 239,391, while short non-commercial positions jumped by 8,028 to 80,028. As a result, the spread between long and short positions decreased by 3,173. The closing price decreased to 1.0866 from 1.0922, indicating a bearish market.
Indicator Signals:
Moving Averages
Trading is conducted below the 30 and 50-day moving averages, indicating a bearish market character.
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 case of an upward movement, the upper boundary of the indicator around 1.0806 will act as resistance.
Indicator 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 Indicator (Moving Average Convergence/Divergence) 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 certain requirements.
• Long non-commercial positions represent the total long open positions of non-commercial traders.
• Short non-commercial 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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