23.07.202418:02 Forex Analysis & Reviews: EUR/USD: Trading Plan for the US Session on July 23rd (Analysis of Morning Trades). Euro Returns to Decline

In my morning forecast, I focused on the 1.0877 level and planned to make trading decisions based on it. Let's look at the 5-minute chart to see what happened. The decline and a false breakout created an entry point to buy the euro. However, as seen in the chart, after a 10-point upward movement, pressure on the pair returned, causing a drop to the next support level at 1.0860, which buyers are now retesting. The technical outlook for the second half of the day has been revised.

To Open Long Positions on EUR/USD:

The correction in the euro continues, which is not surprising given the lack of important statistics. We are expecting data on existing home sales in the US and the Richmond Fed manufacturing index. The existing home sales data is much more important, and if it rises, the pair will likely continue to fall, which I plan to take advantage of. I prefer to act on a decline after updating the daily low and forming a false breakout around the new support level at 1.0853. This will create favorable conditions for increasing long positions as the upward trend develops, with the prospect of testing 1.0875—the new resistance formed in the first half of the day. A breakout and move through this range from top to bottom will strengthen the pair, providing a chance to rise towards 1.0896. The furthest target will be the maximum of 1.0919, where I will take profits. If EUR/USD declines and there is a lack of activity around 1.0853 in the second half of the day, sellers will continue their activity, targeting further correction. In this case, I will enter only after forming a false breakout around the next support level at 1.0834. I plan to open long positions on a rebound from 1.0813 with a target of an upward correction of 30-35 points within the day.

To Open Short Positions on EUR/USD:

Sellers continue to act more aggressively, and strong US statistics should assist them. Currently, it is best to act on the reverse during a rise. The formation of a false breakout around the new resistance at 1.0875, where the moving averages are slightly above, will be an ideal scenario for entering short positions to continue the downward trend and target the support at 1.0853. A breakout and consolidation below this range, along with a reverse test from bottom to top, will increase pressure on the euro and provide another selling opportunity with a move towards the minimum of 1.0834, where I expect to see increased buying activity. The furthest target will be the area of 1.0813, where I will take profits. Testing this level will significantly impact the bullish market. If EUR/USD rises in the second half of the day and bears are absent at 1.0875—an outcome that is also quite likely—buyers will regain their initiative. In this case, I will postpone sales until the next resistance level at 1.0896, which coincides with today's high, is tested. I will also sell at that level, but only after an unsuccessful attempt to consolidate. I plan to open short positions on a rebound from 1.0919, targeting a downward correction of 30-35 points.

Commitment of Traders (COT) Report for July 16th:

The COT report shows a decrease in short positions and an increase in long positions. Talks around rate cuts in the US and the pause planned by the European Central Bank fueled demand for risk assets, including the euro, which helped the market grow. However, after the release of all important data and decisions—referring to the ECB meeting and the decision to keep rates unchanged—the market entered a calm phase that may last until the end of the month. Only GDP data might lead to a spike in volatility. For this reason, it is best to stick to cautious trading within the channel. The COT report indicated that long non-commercial positions increased by 14,108 to 179,937, while short non-commercial positions decreased by 7,018 to 155,188. As a result, the spread between long and short positions narrowed by 1,101.

Indicator Signals:

Moving Averages:

Trading is below the 30-day and 50-day moving averages, indicating a decline in the euro.

Note: The periods and prices of the moving averages are based on the hourly chart (H1) and differ from the classical daily moving averages on the daily chart (D1).

Bollinger Bands:

In the event of a decline, the lower boundary of the indicator, around 1.0869, will act as support.

Indicator Descriptions:

• Moving Average: Determines the current trend by smoothing out volatility and noise. Period: 50. Marked in yellow on the chart.
• Moving Average: Determines 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; Signal Line – period 9.
• Bollinger Bands: Period: 20.
• Non-commercial traders: Speculators, including individual traders, hedge funds, and large institutions, using the futures market for speculative purposes and meeting certain criteria.
• Long non-commercial positions: Total long open positions held by non-commercial traders.
• Short non-commercial positions: 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.