27.12.202414:48 Forex Analysis & Reviews: EUR/USD: Trading Plan for the U.S. Session on December 27th (Review of Morning Trades). The Euro Recovers Slightly

In my morning forecast, I highlighted the 1.0413 level as a decision point for market entry. Let's examine the 5-minute chart to understand what transpired. A breakout and retest of 1.0413 provided an opportunity to enter long positions, resulting in a rise of over 30 points. The technical outlook for the second half of the day remains unchanged.

To open long positions on EURUSD:

The low activity of euro sellers allowed bulls to reclaim the midpoint of the 1.0413 channel, leading to an active rise towards the 1.0446 resistance area. This afternoon, we anticipate data on the U.S. goods trade balance and changes in wholesale inventories. These figures are unlikely to significantly impact market movement, but given the demand for the euro, weak data could support further growth. In case of a decline, bulls will need to reaffirm their presence around the 1.0413 support, which served as resistance earlier today. A false breakout at this level would be a suitable condition for increasing long positions, aiming for a return to 1.0446—the upper boundary of the sideways channel. A breakout and retest of this range would confirm a valid entry point for purchases, targeting 1.0476. The furthest target would be the 1.0508 maximum, where I plan to take profits. If EUR/USD declines and there's no activity around 1.0413 this afternoon, pressure on the pair will increase, leading to a more substantial drop in the euro. In such a scenario, I will consider entering only after forming a false breakout near the 1.0380 support. I plan to open long positions immediately on a rebound from 1.0347, aiming for an intraday upward correction of 30-35 points.

To open short positions on EURUSD:

If the euro continues to rise amid weak U.S. data, defending the 1.0446 resistance—which we haven't yet reached—will be a priority for sellers. A false breakout there would restore bearish momentum and provide an entry point for short positions, aiming for a decline to the 1.0413 support, where the moving averages favor the bulls. A breakout and consolidation below this range, followed by a retest from bottom to top, would offer another suitable selling opportunity, targeting the 1.0380 minimum, undermining buyers' plans for further pair correction. The furthest target would be the 1.0347 level, where I plan to take profits. If EUR/USD rises this afternoon and bears are inactive around 1.0446, I'll postpone short positions until testing the next resistance at 1.0476. I also plan to sell there, but only after an unsuccessful consolidation. I intend to open short positions immediately on a rebound from 1.0508, aiming for a downward correction of 30-35 points.

The Commitment of Traders (COT) report for December 10 showed an increase in short positions and a reduction in long positions. Overall, the new figures left the market positioning virtually unchanged. The final meeting of the U.S. Federal Reserve System this year is approaching, where a decision to cut interest rates is expected. This has recently prevented the dollar from rising, maintaining demand for risk assets. If the Fed adopts a more cautious approach for next year, the chances of a bearish market returning in EUR/USD will increase significantly. The COT report indicated that long non-commercial positions fell by 10,318 to 157,375, while short non-commercial positions rose by 7,766 to 232,948. As a result, the gap between long and short positions increased by 4,450.

Indicator Signals

Moving Averages

Trading is above the 30 and 50-day moving averages, indicating euro growth.

Note: The author considers the period and prices of moving averages on the H1 hourly chart, differing from the general definition of classic daily moving averages on the D1 daily chart.

Bollinger Bands

In case of a decline, the lower boundary of the indicator around 1.0400 will act as support.

Indicator Descriptions:

• Moving Average (MA): Determines the current trend by smoothing volatility and noise.
  • Period: 50. Marked in yellow on the chart.
  • 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 certain requirements.
• Long Non-Commercial Positions: Total long open positions of non-commercial traders.
• Short Non-Commercial Positions: Total short open positions of non-commercial traders.
• Total Non-Commercial Net Position: The difference between short and long positions of non-commercial traders.