16.01.202513:59 Forex Analysis & Reviews: EUR/USD: Trading Plan for the U.S. Session on January 16th (Morning Review)

In my morning forecast, I focused on the 1.0299 level and planned to make trading decisions based on its behavior. Let's analyze the 5-minute chart to see what happened. A rise and the formation of a false breakout at this level provided a good selling opportunity, resulting in a 20-point drop. The technical picture has been revised for the second half of the day.

For Opening Long Positions on EUR/USD

Rising inflation in Germany limited the euro's downward potential in the morning, but upcoming, more significant US data might prompt traders to act more decisively.This afternoon, the market will focus on US initial jobless claims, as well as critical figures for retail sales and the Philadelphia Fed Manufacturing Index. Additionally, FOMC member John Williams will speak, drawing trader attention.If retail sales rise, this could strengthen the US dollar by delaying rate-cut plans due to the likelihood of renewed inflationary pressure. Conversely, weak data could support the euro.

In case of renewed pressure on the pair, I plan to act around the 1.0262 support level, which wasn't tested earlier today. A false breakout there could provide a good buying opportunity, targeting 1.0312 resistance. A breakout and subsequent retest of this range could confirm a buy entry, with the targets at 1.0352 and 1.0393, where profits will be taken.

If EUR/USD falls due to strong US data and no activity is seen around 1.0262, pressure could increase significantly, and sellers might push the pair towards 1.0241. I'll consider buying only after a false breakout at this level. Alternatively, long positions on a rebound will be considered around 1.0210, aiming for an intraday correction of 30–35 points.

For Opening Short Positions on EUR/USD

Sellers are currently less active as traders await US data and Federal Reserve commentary. If the pair surges after the data, a false breakout at 1.0312 could confirm the presence of large market players, creating a selling opportunity targeting 1.0262 support, where buyer activity is expected.

A break and retest below 1.0262 could provide another selling opportunity, aiming for 1.0241, marking a return to a bearish trend. The final target will be 1.0210, where profits will be taken.

If EUR/USD rises in the afternoon and bears fail to act at 1.0312, I'll wait for a test of the 1.0352 resistance. I'll sell there only after a failed breakout. For now, short positions on a rebound will be considered at 1.0393, targeting an intraday correction of 30–35 points.

The Commitments of Traders (COT) report for January 7 showed a reduction in both short and long positions.As the Federal Reserve's rate cuts are postponed to fall this year, the US dollar is positioned strongly in the medium term. If upcoming US inflation and GDP data show growth, it will further support long positions on the dollar.

The report indicates that long non-commercial positions decreased by 2,303 to 166,503, while short non-commercial positions fell by 7,743 to 230,627, increasing the net position difference by 2,456.

Indicator Signals

Moving Averages

Trading is occurring near the 30- and 50-day moving averages, indicating market uncertainty.

Note: The moving average periods and prices are based on the H1 hourly chart and differ from classic daily averages on the D1 daily chart.

Bollinger BandsSupport is expected at the lower boundary of the indicator near 1.0275 in case of a decline.

Indicator Descriptions:

• Moving Average (MA): Smooths volatility and noise to determine the current trend.
  • 50-period MA: Yellow line on the chart.
  • 30-period MA: Green line on the chart.
• MACD (Moving Average Convergence/Divergence):
  • Fast EMA: 12-period.
  • Slow EMA: 26-period.
  • SMA: 9-period.
• Bollinger Bands: Based on a 20-period moving average.
• Non-commercial traders: Speculators, such as individual traders, hedge funds, and large institutions, using futures for speculative purposes.
• Long non-commercial positions: Total long open positions.
• Short non-commercial positions: Total short open positions.
• Net non-commercial position: Difference between short and long positions.