20.08.202414:34 Forex Analysis & Reviews: EUR/USD: Trading Plan for the U.S. Session on August 20 (Review of Morning Trades)

In my morning forecast, I focused on the 1.1086 level and planned to make trading decisions based on it. Let's look at the 5-minute chart and see what happened. The rise and subsequent false breakout created an excellent entry point for short positions, resulting in a decline of about 15 points. Considering the low volatility, this is a fairly good result. The technical picture was not revised for the second half of the day.

To open long positions on EUR/USD:

It's evident that there aren't many sellers for the euro even at these attractive prices, indicating a potential repetition of yesterday's scenario, where the pair continued to rise after speeches from Federal Reserve officials. The data from the Eurozone for July this year remained unrevised and matched preliminary values, maintaining demand for the euro. In the second half of the day, I still plan to stick to buying on declines, similar to the morning strategy. A false breakout around the support at 1.1059, where the moving averages are located, will be a good condition for opening long positions, targeting a rise in the euro and the strengthening of the bullish trend with a prospect of testing 1.1086. A breakout and consolidation above this significant resistance could strengthen the pair's chances of rising towards 1.1111. The furthest target will be the maximum of 1.1138, where I plan to take profit. If EUR/USD declines and there is no activity around 1.1059 in the second half of the day, which is unlikely, sellers will have a chance for a larger correction and may take active steps to push the pair lower. In that case, I will only enter after a false breakout around the next support at 1.1033. I plan to open long positions immediately on a rebound from 1.1006, targeting an upward correction of 30-35 points within the day.

To open short positions on EUR/USD:

Sellers have shown some activity, but they haven't received support from larger players. For a reversal of the bullish trend, we need a firm stance from Federal Reserve officials, which is unlikely to happen. I still expect the first sign of bears around the 1.1086 resistance level, where a false breakout, similar to what I discussed earlier, would be a reason to open short positions targeting the 1.1059 support. A breakout and consolidation below this range, followed by a retest from the bottom up, would provide another opportunity to sell, targeting a move towards 1.1033, where I expect more active buying. The furthest target will be around 1.1006, where I plan to take profit. If EUR/USD rises in the second half of the day and bears fail to show up at 1.1086, a level that has been tested twice recently, buyers will have a chance for a larger rise. In that case, I will delay selling until the next resistance at 1.1111 is tested. I will also sell there but only after an unsuccessful consolidation. I plan to open short positions immediately on a rebound from 1.1138, targeting a downward correction of 30-35 points.

The COT (Commitment of Traders) report for August 13 showed nearly equal growth in short positions and a reduction in long positions. This indicates that market equilibrium is being maintained after several U.S. Federal Reserve representatives suggested that it's time to shift towards easing monetary policy. Ahead of us is an important event in August: Federal Reserve Chairman Jerome Powell's speech in Jackson Hole, where many investors and traders will try to understand the future course of monetary policy. Also, remember to closely monitor the economic calendar and incoming data. The COT report indicated that long non-commercial positions decreased by 3,587 to 182,212, while short non-commercial positions increased by 3,010 to 155,229. As a result, the gap between long and short positions increased by 1,036.

Indicator Signals:

Moving averages:

Trading is conducted above the 30 and 50-day moving averages, indicating further growth of the pair.

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

Bollinger Bands:

In case of a decline, the lower boundary of the indicator around 1.1059 will act as support.

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 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.