10.01.202207:53 Forex Analysis & Reviews: EUR/USD: plan for the European session on January 10. COT reports. Non-farm employment report hurt the dollar

To open long positions on EUR/USD, you need:

A highly controversial report on the US labor market hurt the dollar bulls in the afternoon. Let's take a look at the 5 minute chart and see what happened. In my morning forecast, I paid attention to the 1.1317 level and advised you to make decisions on entering the market. The latest fundamental data on inflation in the eurozone returned the demand for the euro, which led to an increase in the resistance area of 1.1317, from which I advised you to open short positions. As a result of the formation of a false breakout, a sell signal was generated. The downward movement was about 25 points. The released data on the US labor market failed to help the dollar. As a result, one could observe a breakthrough of the resistance at 1.1317 and the euro's growth. The reverse test of this level did not happen, so I did not enter long positions.

Today there is no serious data on the eurozone, but attention will be drawn to several reports that may affect the market. Bulls need to focus their attention at the level of 1.1326 in the first half of the day, which was formed at the end of last Friday and just below which there are moving averages playing on the bulls' side. Forming a false breakout there and good data on the decline in the unemployment rate in the eurozone, as well as the indicator of investor confidence from Sentix should lead to a renewed rise in the euro to the Friday highs. The estimate is for the recovery to the resistance of 1.1358, as the pair could not stay above it today. An important task is to break through this range, and a reverse test from top to bottom will open the opportunity for a jump to the level of 1.1385 and 1.1415, where I recommend taking profits. The 1.1442 level is a more distant target, the test of which will be evidence of the resumption of the bullish trend. If the pair declines during the European session and the bulls are not active at 1.1326, it is best to postpone long positions until the larger support at 1.1294. However, I advise you to open long positions there when a false breakout is formed. You can buy EUR/USD immediately on a rebound from the level of 1.1265, counting on an upward correction of 20-25 points within the day.

To open short positions on EUR/USD, you need:

The bears have done enough to bring the pressure back on the euro today. If EUR/USD re-grows during the European session after the release of good reports on the unemployment rate of the eurozone countries, bears should try to do their best not to miss the resistance of 1.1358, formed at the end of last week. Growth above this level will practically lead to a change in the direction of the pair's movement and displace it from the horizontal channel. Forming a false breakout at 1.1358 creates the first entry point to short positions in hopes of returning pressure on EUR/USD and a decline to the 1.1326 area. A more active struggle will unfold for this level, since it plays an important role. There are also moving averages that play on the bull's side below 1.1326. A breakthrough and test from the bottom up of this range will give an additional signal to open short positions with the prospect of a decline to a large low like 1.1294. Only a breakthrough of this level will change the market direction to a downward one and take down a number of bulls' stop orders, which will cause EUR/USD to fall with renewed lows: 1.1265 and 1.1248, where I recommend taking profits. If the euro grows and the bears are not active at 1.1358, it is best not to rush to sell. The optimal scenario will be short positions when a false breakout is formed in the 1.1385 area - the bears' last hope. It is possible to sell EUR/USD immediately on a rebound from the high like 1.1415, or even higher - in the 1.1442 region, counting on a downward correction of 15-20 points.

I recommend for review:

The Commitment of Traders (COT) report for December 28 revealed that both short and long positions increased, but the latter declined slightly more, which led to a reduction in the negative delta value. This data takes into account the recent meetings of the Federal Reserve and the European Central Bank. However, judging by the alignment of forces, nothing has changed much, which is generally confirmed by the schedule. Many problems in the economies of the eurozone and the United States remain due to the Omicron strain of coronavirus, which does not allow representatives of central banks to live in peace. Most likely, the further monetary policy of the Fed and the ECB will depend on how the situation with the coronavirus will develop after the New Year. The report shows that the buyers of risky assets, and we are talking about the euro, are in no hurry to build up long positions even after the recent statements by the ECB that it plans to fully complete its emergency bond buying program as early as next March. On the other hand, the US dollar also has support: the Fed is planning to raise interest rates as early as next spring, which makes the US dollar more attractive. The COT report indicated that long non-commercial positions rose from 189,530 to 196,595, while short non-commercial positions rose from 201,409 to 206,757. This suggests that traders will continue to actively fight for further direction. market. At the end of the week, the total non-commercial net position decreased its negative value from -11,879 to -10,162. The weekly closing price, due to the horizontal channel, remained almost unchanged - 1.1277 against 1.1283 a week earlier.

Indicator signals:

Trading is carried out above the 30 and 50 daily moving averages, which indicates an attempt by the bulls to continue the euro's growth.

Moving averages

Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differs from the general definition of the classic daily moving averages on the daily D1 chart.

Bollinger Bands

In case of a decline, support will be provided by the lower border of the indicator in the area of 1.1294. In case of growth, the upper border of the indicator in the area of 1.1385 will act as a resistance.

Description of indicators

• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
• MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-commercial speculative traders, 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.
• Total non-commercial net position is the difference between short and long positions of non-commercial traders.