EUR/USD: plan for the US session on December 16 (analysis of morning deals). Euro buyers are aiming for a breakthrough of 1.1323

To open long positions on EURUSD, you need:

In my morning forecast, I paid attention to the level of 1.1301 and advised making decisions on entering the market. Let's look at the 5-minute chart and figure out what happened. The versatile data on activity in the manufacturing sector and the service sector of the eurozone countries in December this year limited the upward potential of the pair, which has been observed since the opening of the European session. A breakout and consolidation above 1.1301 with a reverse test from top to bottom - all this led to the formation of an excellent entry point into long positions. The upward movement was about 15 points, after which traders began to take profits before the meeting of the European Central Bank, which led to a decrease in the pair. And what were the entry points for the pound in the morning?

The whole focus in the afternoon will be on the results of the meeting of the European regulator, as well as on whether it will make a decision on tightening monetary policy in the future, or leave everything as it is. If the central bank governors surprise us, for example, they announce a more active curtailment of economic support measures and an increase in interest rates next year – only in this case can we count on a sharp increase in the EUR/USD pair. If all reports coincide with economists' expectations, the euro may significantly sink against the US dollar. From the buyers' point of view, the optimal entry point into long positions will be the formation of a false breakdown in the area of 1.1285, which was formed following the results of the European session. Just below this level, there are moving averages that play on the buyers' side, which will also support the pair in case of its decline. A more important task will be to regain control of the rather important resistance of 1.1323, which has not been able to get above since December 9. But in addition to the meeting of the European Central Bank, do not forget about the fundamental statistics on the United States. A reduction in the number of initial applications for unemployment benefits and an increase in industrial production will all increase pressure on the euro. Weak data, on the contrary, will allow us to break above 1.1323, and the reverse test of this level from top to bottom forms an additional entry point into euro purchases with the prospect of strengthening to 1.1353 and 1.1381 – the upper limit of the side channel from November 30. Its breakdown can seriously affect the EUR/USD downward trend, so be very careful at this level. A breakthrough and a top-down test of 1.1381, together with hawkish statements by ECB politicians, will lead to a larger increase in the area of highs: 1.1415 and 1.1442. A more distant target will be the 1.1480 level, where I recommend fixing the profits. If the pair declines during the American session and there is no bull activity at 1.1285, it is best to postpone sales to larger support of 1.1255. I advise buying EUR/USD immediately for a rebound from the minimum of 1.1230, or even lower - around 1.1208 with the aim of an upward correction of 20-25 points within a day.

To open short positions on EURUSD, you need:

Sellers failed to cope with the morning task and did not keep the pair below 1.1301. However, it is very early for bears to panic. Many believe that the European Central Bank will leave the policy unchanged, which will surely return the bearish trend of the EUR/USD pair. Strong US data will be an additional catalyst for opening short positions. The main task of the bears for the second half of the day is to protect the level of 1.1323, above which it is impossible to issue euros in any way. Only the next formation of a false breakdown there, together with strong US data, will lead to an excellent entry point into short positions in the hope of maintaining pressure on the pair. An equally important task for EUR/USD sellers is to break through the support of 1.1285, which was formed following the results of the European session. A breakdown and a bottom-up test of 1.1285 will lead to the formation of a signal to open short positions with the prospect of a decline in the area of 1.1255. A more distant target will be the 1.1230 level, where I recommend fixing the profits. In the case of the growth of the euro and the absence of bear activity at 1.1323, it is best not to rush with sales. The optimal scenario will be short positions when forming a false breakdown in the area of 1.1353. It is possible to sell EUR/USD immediately on a rebound from the highs: 1.1381 and 1.1415 with the aim of a downward correction of 15-20 points.

The COT report (Commitment of Traders) for December 7 recorded a decrease in short positions and a slight increase in long ones, which led to a decrease in the negative value of the delta. Many traders were preparing for the meetings of central banks that will be held this week. Very serious changes are expected in the monetary policy of the Federal Reserve System, as well as the European Central Bank. The inflation data force the management to act more aggressively, but which way it will choose is a rather difficult question. Last week there were several speeches by the Chairman of the Federal Reserve System Jerome Powell, who in his comments spoke enough about the expected changes in monetary policy towards its tightening. The omicron coronavirus strain also prevents Europeans and Americans from sleeping peacefully, which constrains demand for risky assets in the face of uncertainty about the future policy of the European Central Bank. The latest November COT report indicated that long non-profit positions rose from the level of 191,048 to the level of 194,869, while short non-profit positions fell from the level of 214,288 to the level of 203,168. This suggests that traders preferred to fix part of the profit before important events in the conditions of the formed side channel. At the end of the week, the total non-commercial net position decreased its negative value from -23,240 to -8,299. The weekly closing price, on the contrary, did not change due to the side channel - 1.1283 against 1.1292.

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 daily moving averages, which indicates the preservation of bullish sentiment.

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 1.1255 will increase the pressure on the pound. A breakthrough of the upper limit of the indicator in the area of 1.1323 will lead to a new wave of euro growth.

Description of indicators