02.09.202417:40 Forex Analysis & Reviews: EUR/USD: Trading Plan for the U.S. Session on September 2 (Analysis of Morning Trades)

In my morning forecast, I highlighted the 1.1070 level and planned to make trading decisions based on it. Let's examine the 5-minute chart to see what happened. The rise and formation of a false breakout at this level created a prime entry point for selling the euro, but the pair did not experience a significant drop. After a 12-point decline, sellers exited the market, leading to a return of EUR/USD to around 1.1070. For the second half of the day, the technical picture has been slightly revised.

For Opening Long Positions in EUR/USD:

Weak production data from the Eurozone, although slightly better than economists' forecasts, did not allow the euro to recover properly after Friday's drop. The decline in manufacturing activity in the Eurozone is now a major concern, second only to inflation, which is gradually normalizing as indicated by August data. Given the absence of U.S. statistics in the afternoon, it is unlikely that there will be more active trading during the U.S. session. Therefore, I have prudently adjusted the support and resistance levels to form a sideways channel within which I plan to trade. I will only act on a decline following a false breakout near the new support level at 1.1044. Only then will it be suitable to open long positions with the expectation of euro growth and a test of the new resistance at 1.1086, just below which the moving averages are positioned on the sellers' side. A breakout above this range could lead to a rise in the pair, with a potential test of 1.1114. The final target will be the level at 1.1138, where I will take profit. If EUR/USD declines further and shows no activity around 1.1044 in the afternoon, which is unlikely, sellers may strengthen their positions and have a chance for a larger correction. In this case, I will only enter after a false breakout near the next support level at 1.1015. I plan to open long positions following a rebound from 1.0984 with a target for an intraday upward correction of 30-35 points.

For Opening Short Positions in EUR/USD:

Sellers made their presence known after bulls attempted to break the daily high, but that's all for now. The absence of U.S. statistics could nullify all volatility, so I wouldn't expect much today. A false breakout near 1.1086 will signal a good opportunity for opening short positions, as discussed earlier. The target will be the new support at 1.1044, where I expect the first signs of bulls. A breakout and consolidation below this range, as well as a test from below, will provide another selling point with movement towards 1.1015. The final target will be around 1.0984, where I will take profit. If EUR/USD moves up and there are no sellers at 1.1086, buyers will regain initiative and have a chance to update the resistance at 1.1114. I will also sell there, but only after a failed breakout. I plan to open short positions following a rebound from 1.1138 with a target for a downward correction of 30-35 points.

In the COT report (Commitment of Traders) for August 20, there was an increase in long positions and a significant reduction in short positions. This indicates continued bullish sentiment among risk asset buyers. The recent speech by Fed Chairman Jerome Powell in Jackson Hole, which is not yet reflected in this report, will likely lead to further shifts in favor of euro buyers. However, the future direction of the dollar will depend entirely on incoming data related to inflation and the U.S. labor market, so I recommend paying special attention to these indicators. The COT report shows that long non-commercial positions increased by 12,138 to 194,350, while short non-commercial positions decreased by 16,896 to 138,333. As a result, the gap between long and short positions grew by 3,047.

Indicator Signals:

Moving Averages:

Trading is occurring around the 30-day and 50-day moving averages, indicating a sideways market.

Note: The periods and prices of the moving averages are considered on the H1 hourly chart and differ from the general definition of classical daily moving averages on the D1 daily chart.

Bollinger Bands:

In case of a decline, the lower boundary of the indicator around 1.1044 will act as support.

Indicator Descriptions:

• Moving Average (MA): Defines the current trend by smoothing out volatility and noise. Period – 50, marked in yellow on the chart.
• Moving Average (MA): Defines the current trend by smoothing out volatility and noise. Period – 30, marked in green on the chart.
• MACD (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 specific requirements.
• Long Non-commercial Positions: Represents the total long open positions held by non-commercial traders.
• Short Non-commercial Positions: Represents the total short open positions held by non-commercial traders.
• Total Non-commercial Net Position: The difference between short and long positions held by non-commercial traders.