In my morning forecast, I focused on the 1.1047 level, planning to make market entry decisions based on it. Let's look at the 5-minute chart and see what happened. The rise and the formation of a false breakout provided an excellent entry point for short positions, resulting in a drop of approximately 15 points. Considering the low volatility, this is a satisfactory outcome. The technical outlook has not been revised for the second half of the day.
For opening long positions on EUR/USD:
It's clear that there aren't as many sellers as it initially seemed after the failure at the 1.1047 level. I suggest waiting for the data on the Leading Indicators Index. After the speech by FOMC member Christopher Waller, further decisions can be made. I still plan to stick to the buy strategy on declines, similar to the morning strategy. A false breakout formation around the support level at 1.1014, where the moving averages are already located, will provide a suitable condition for opening long positions, targeting a rise in the euro and a strengthening of the bullish trend, with the potential to test 1.1047. A breakthrough and update of this significant resistance from the top-down would lead to a stronger pair, with a chance to rise toward the 1.1076 level. The final target will be the 1.111 level, where I will lock in profits. In the event of a decline in EUR/USD and a lack of activity around 1.1014 in the second half of the day, which is unlikely, sellers will have a chance for a more significant correction, and they may begin active efforts to push the pair down at the beginning of next week. In that case, I will only enter after a false breakout forms around the next support level at 1.0986. I plan to open long positions immediately on a rebound from 1.0952, targeting an intraday upward correction of 30-35 points.
For opening short positions on EUR/USD:
Sellers have shown themselves but haven't felt support from large players. Strong U.S. statistics, which aren't available, are needed to reverse the upward trend. I still expect the first signs of bearish activity around the resistance at 1.1047, where a false breakout, similar to what I discussed above, will be a reason to open short positions targeting the support at 1.1014. A break and consolidation below this range, along with a retest from the bottom-up, will provide another selling point, targeting the 1.0983 level, where I expect more active buyers to appear. The final target will be the 1.0952 level, where I will lock in profits. If EUR/USD moves higher in the second half of the day and there are no bears at 1.1047—this level has been tested three times recently—buyers will have a chance for a more significant rise. In that case, I will postpone selling until the next resistance at 1.1076 is tested. I will also sell there, but only after a failed attempt to consolidate. I plan to open short positions immediately on a rebound from 1.1111, targeting an intraday decline of 30-35 points.
The COT report (Commitment of Traders) for August 6 showed an increase in long positions and a decrease in short positions. It's evident that the Federal Reserve's new course of easing monetary policy hasn't gone unnoticed, and despite similar actions expected from the ECB, the euro has a good chance of recovering against the dollar since the U.S. regulator might surprise everyone in the fall by cutting rates by half a percent. A series of statistics will be released soon, which will determine the Fed's next actions, so keep a close eye on the economic calendar. The COT report indicated that non-commercial long positions increased by 2,793 to 185,799, while non-commercial short positions decreased by 12,988 to 152,219. As a result, the gap between long and short positions fell by 1,293.
Indicator Signals:
Moving Averages:
Trading is above the 30 and 50-day moving averages, indicating further growth for the pair.
Note: The period and prices of the moving averages are considered by the author on the H1 hourly chart and differ 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 1.1010 will act as support.
Indicator Descriptions:
Moving Average: Defines the current trend by smoothing volatility and noise. Period 50. Marked in yellow on the chart.Moving Average: Defines the current trend by smoothing volatility and noise. Period 30. Marked in green on the chart.MACD Indicator (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 criteria.Long Non-Commercial Positions: The total long open position of non-commercial traders.Short Non-Commercial Positions: The total short open position of non-commercial traders.Total Non-Commercial Net Position: The difference between short and long positions of non-commercial traders.