Yesterday, the pair formed some great entry signals. Let's have a look at what happened on the 5-minute chart. In my morning review, I mentioned the level of 1.0890 as a possible entry point. A decline and a false breakout near 1.0890 produced a buy signal, sending the pair up by more than 20 pips. In the afternoon, a breakout and retest of 1.0890 generated a sell signal. As a result, the pair fell by more than 30 pips. Safeguarding 1.0860 produced a buy signal, and the price was up by another 30 pips.
For long positions on EUR/USD:
A good US labor market report and rising inflation expectations triggered a major sell-off yesterday afternoon. However, the bulls took advantage of this moment and quickly picked up all the fall. Today, the eurozone PMIs will provide impetus to EUR/USD traders. If the reports turn out to be a disappointment, the pressure on the euro will return, and the bears may try to regain control of the market. You should pay attention to the eurozone Manufacturing and Services PMIs, as well as the composite PMI. The ECB's report will also be quite interesting to analyze. An optimal buying strategy would be to look for a false breakout around the 1.0890 level. This could provide a good entry point for long positions, aiming for further growth and testing the 1.0925 resistance. A break and a downward retest of this range, coupled with positive eurozone reports, would signal another buying opportunity, potentially retesting the monthly high around 1.0962. The ultimate target here is the 1.1004 area, where I plan to take profits. Should EUR/USD decline and show no activity at 1.0890 in the first half of the day, this could spell trouble for the euro buyers. In such a case, the market could be entered after a false breakout around the next support at 1.0860. I would consider opening long positions immediately on a rebound from 1.0827, aiming for an upward correction of 30-35 pips within the day.
For short positions on EUR/USD:
The bears were active yesterday, but it's hard to say whether they will be able to keep their positions. In case the pair grows, the objective is to defend the area of the nearest resistance at 1.0925, which we did not reach yesterday. A false breakout at this mark will give a good sell signal to support the downward correction and test support at 1.0890. This is where large buyers may step in. Only after a breakout and consolidation below this range, as well as its upward retest, do I expect to receive another signal to sell the pair with a target at the 1.0860. The ultimate target will be the 1.0827 low where I will be taking profits. In the event of an upward movement in EUR/USD during the European session and the absence of bears at 1.0925, the bulls may gain an advantage. This would pave the way for buyers to reach the monthly high of 1.0962. Selling there is also an option, but only after a failed consolidation. I will initiate short positions immediately on a pullback from 1.1004, considering a downward correction of 30-35 pips.
COT report:
The Commitments of Traders (COT) report for November 14 indicated a notable increase in long positions and a significant reduction in short positions. The recently released inflation data clearly indicated that the current cycle of interest rate hikes in the US has reached its peak, significantly impacting the US dollar and reducing short positions on the euro, thereby reviving demand for it. The upcoming publication of the minutes from the Federal Reserve's November meeting is anticipated, where traders will seek answers to remaining questions. However, it is already apparent that rates have peaked and a reduction is expected next year. According to the COT report, non-commercial long positions increased by 8,707 to 221,190, while non-commercial short positions decreased by 11,144 to 112,283. Consequently, the spread between long and short positions increased by 3,283. The closing price saw a sharp rise, settling at 1.0902 compared to the previous value of 1.0713.
Indicator signals:
Moving averages:
Trading just around the 30- and 50-day moving averages indicates uncertainty.
Please note that the time period and levels of the moving averages are analyzed only for the H1 chart, which differs from the general definition of the classic daily moving averages on the D1 chart.
Bollinger Bands
If EUR/USD declines, the indicator's lower border near 1.0860 will serve as support.
Description of indicators:
• A moving average of a 50-day period determines the current trend by smoothing volatility and noise; marked in yellow on the chart;
• A moving average of a 30-day period determines the current trend by smoothing volatility and noise; marked in green on the chart;
• MACD Indicator (Moving Average Convergence/Divergence) Fast EMA with a 12-day period; Slow EMA with a 26-day period. SMA with a 9-day period;
• Bollinger Bands: 20-day period;
• Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements;
• Long non-commercial positions represent the total number of long positions opened by non-commercial traders;
• Short non-commercial positions represent the total number of short positions opened by non-commercial traders;
• The non-commercial net position is the difference between short and long positions of non-commercial traders.