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To open long positions on EURUSD, you need:
In my morning forecast, I paid attention to the 1.1331 level and advised making decisions on entering the market. Let's look at the 5-minute chart and figure out what happened. Against the background of the lack of fundamental statistics and new buyers willing to open long positions at current highs, the euro sank slightly. An unsuccessful attempt to grow above 1.1331 and the formation of a false breakdown there led to the formation of a good sell signal. As a result, the euro fell by 25 points. Closer to the middle of the day, the bears achieved a breakdown and consolidation below 1.1312, testing it from the bottom up, but this did not lead to a new sale. I had to fix losses and revise the technical picture for the afternoon. And what were the entry points for the pound this morning?
Most likely, during the American session, the pair will continue to trade in the wider side channel 1.1305-1.1333. Today, there are no important statistics on the American economy, and many markets are closed after Christmas, so volatility and trading volume will remain extremely low. A large buyer is visible on the market at the base of the 13th figure. The formation of a false breakdown at the level of 1.1305 in the afternoon will be a signal to buy the euro in the expectation of recovery to the resistance of 1.1333, just below which the moving averages are located, playing on the sellers' side. An equally important task will be the breakdown of this range, and the reverse test from top to bottom will open up the possibility of growth in the area of new levels: 1.1358 and 1.1381, where I recommend fixing the profits. A more distant target will be the 1.1415 area. With the pair declining during the European session and the absence of bull activity at 1.1305, it is best to postpone purchases to larger support of 1.1291. This strategic level is very important for buyers, so you can count on an active growth of the pair from this range. However, I advise you to open long positions there when forming a false breakdown. The last hope of buyers to keep the pair in the upward correction channel will be the minimum of 1.1265, from which it is possible to open long positions immediately for a rebound with the aim of an upward correction of 20-25 points within the day.
To open short positions on EURUSD, you need:
In case of further growth of the pair, and the balance has returned after another unsuccessful breakdown of the 13th figure, sellers need to try to do everything possible to protect the resistance of 1.1333. Given that there are no important statistics today, the bears may be able to do this, although trading is unlikely to go beyond the side channel. Low trading volume after Christmas will restrain volatility, which will lead to the formation of contradictory signals for entering the market. Only the formation of a false breakdown at 1.1333 forms the first entry point into short positions in the expectation of a return of pressure on the pair and a decline in the area of 1.1305. A more active struggle will unfold for this level. A breakdown and a bottom-up test of this range will give an additional signal to open short positions with the prospect of reducing the pair to a large support level of 1.1291. Only going beyond this level will demolish several buyers' stop orders and cause a larger drop in EUR/USD with the update of the lows 1.1265 and 1.1246, where I recommend fixing the profits. In the case of the growth of the euro and the lack of activity of bears at 1.1333, it is best not to rush with sales. The optimal scenario will be short positions when forming a false breakdown in the area of 1.1358. You can sell EUR/USD immediately on a rebound from the maximum of 1.1381, or even higher - around 1.1415 with the aim of a downward correction of 15-20 points.
The COT report (Commitment of Traders) for December 14 recorded a decrease in both short and long positions, but the latter turned out to be slightly more, which led to an increase in the negative value of the delta. However, it is worth noting that these data do not take into account the results of the meeting of the Federal Reserve System and the European Central Bank. But if we look at the overall picture, trading in the side channel remains the same, and even the meetings of the central banks did not allow us to decide on the further direction of the pair. Buyers of risky assets are not in a hurry to build up long positions even after the statement of the European Central Bank that it plans to fully complete its emergency bond purchase program in March next year - this indicates a change in the bank's policy towards its tightening. On the other hand, the Federal Reserve is already planning to raise interest rates by this time, which makes the US dollar more attractive. However, the uncertainty with the new strain of coronavirus continues to scare market participants away from active actions: no one wants to buy an overbought dollar, but the cheap euro is also not a very attractive tool yet. The COT report indicates that long non-commercial positions decreased from the level of 194,869 to the level of 189,530, while short non-commercial positions fell from the level of 203,168 to the level of 201,409. This suggests that traders are taking a wait-and-see attitude against the backdrop of all the uncertainty with the global economy. At the end of the week, the total non-commercial net position increased its negative value from -8,299 to -11,879. The weekly closing price did not change at all due to the side channel – 1.1283 against 1.1283 a week earlier.
Signals of indicators:
Moving Averages
Trading is conducted below 30 and 50 daily moving averages, which indicates an attempt by bears to bring the market back under their control.
Note. The period and prices of moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
Bollinger Bands
A breakthrough of the lower limit of the indicator in the area of 1.1305 will lead to a larger drop in the euro. A break of the upper limit around 1.1330 will push the euro to new highs.
Description of indicators
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