To open long positions on EUR/USD, you need:
The first half of the day was not very favorable for the euro bulls. Despite moderate economic data for the eurozone, the pair remained under pressure after buyers had made a successful attempt to defend the support at 1.1592. Let's take a look at the 5-minute chart to figure out what happened with the pair. A decline and a false breakout in the area of 1.1592, which I mentioned in my morning forecast, led to the formation of a buy signal on the euro with an upward target at the high of 1.1619. However, the price failed to reach it, and the euro came under pressure around 1.1610. After that, there was a breakout of 1.1592 without a retest from bottom to top. So, I had to skip the downward movement of the pair to the support level of 1.1571.
In the afternoon, all the focus will again be on the statements made by the US Fed officials, Jerome Powell, and Treasury Secretary Janet Yellen. Today, the US Senate will vote on the debt ceiling suspension which is likely to create additional pressure on the euro. So, you should be very careful when opening buy positions. Although the euro bulls tried to protect the recent local lows, they did not succeed in this. In the course of the New York session, the pair needs to catch hold of the 1.1571 level where the main trading activity is now observed. A false breakout of this level will create a good entry point for opening long positions with a prospect of correction to a new resistance area at 1.1605. A breakout and a test of this area, which comprises moving averages supporting the bulls, will trigger stop losses set by bears. This will create a good entry point for going long, taking into account the pair's possible recovery to the 1.1642 area and then to a larger resistance at 1.1671. This is where I recommend taking profit. The high of 1.1699 serves as another upside target. If the pressure on the euro continues in the afternoon and the data on the US labor market encourages investors, a false breakdown at the support of 1.1543 will lead to the formation of a buy signal. In case the bulls' activity is low at this level, I advise you to wait with buying the pair until the price reaches new lows around 1.1510 and 1.1482. I also advise you to open long positions from these levels right after a rebound, counting on an upward correction of 15-20 pips within the day.
To open short positions on EUR/USD, you need:
Sellers still maintain control over the market without much effort which supports the bearish trend. A test and a breakout of the 1.1571 level, as well as its retest from bottom to top, will create a new entry point for going short. EUR/USD may continue to decline from there to new intraday lows of 1.1543 and 1.1510 where I recommend taking profit. The low of 1.1482 will serve as a further target. However, the pair will be able to reach it only if Republicans and Democrats fail to agree on raising the US national debt limit. In case EUR/USD rises in the second half of the day following the speech of the Fed's Chair, bears will be able to easily defend the resistance at 1.1605 which was formed after the European session. A false breakout of this level will create a good entry point for opening short positions. In case the bears' activity is low at 1.1605, it is best to wait until the price tests larger resistance at 1.1642. I advise you to open short positions only from a new high of 1.1671 right after a rebound, counting on a downward correction of 15-20 pips.
The COT report (Commitment of Traders) for September 21 recorded a sharp increase in short positions and only a slight increase in long positions, which can be explained by risk-off sentiment among traders at the beginning of this autumn. The prospect of changes in the Fed's monetary policy that are likely to happen this November spurs the demand for the US dollar. Many investors expect the regulator to start the reduction of its asset purchase program. The fact that inflation in the US is almost out of control can bring more aggressive actions by the end of the year, which could seriously affect the market sentiment. This week, the Fed representatives as well as its Chairman Jerome Powell may shed light on how the central bank will act in a particular situation. Given that energy prices continue to surge, which will certainly affect the producer and consumer price indices, more clarity from the Federal Reserve would certainly help the markets. The demand for risk assets will remain limited due to the high likelihood of another coronavirus wave and its new Delta strain. All this will force the European Central Bank to stay in a wait-and-see mode and maintain its stimulating policy at current levels as there are no serious inflationary problems in the eurozone so far. The COT report indicated that long positions opened by a non-commercial category of traders rose slightly from 186,554 to 189,406, while short positions increased quite seriously from 158,749 to 177,311. At the end of the week, the total net position of the non-commercial category of traders dropped from 27,805 to 12,095. The weekly closing price also dropped to 1.1726 from 1.1809.
Signals of indicators:
Moving averages:
Trading below 30 and 50 daily moving averages indicates a bear market.
Note: the periods and moving averages are considered for the hourly chart, H1, and differ from the general definition of the classic daily moving averages on the daily chart, D1.
Bollinger Bands
In the case of an uptrend, the upper boundary of the indicator around 1.1699 will act as resistance.
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. The MACD Indicator (Moving Average Convergence/Divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9 Bollinger Bands Period 20 Non-commercial traders are 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 number of long open positions of non-commercial traders. Non-commercial short positions represent the total number of short open positions of non-commercial traders. Non-commercial net position is the difference between short and long positions of non-commercial traders.