FX.co ★ Forecast and trading signals for EUR/USD on December 10. COT report. Analysis of Wednesday. Recommendations for Thursday

EUR/USD 15M

Both linear regression channels turned sideways on the 15-minute timeframe, and from our point of view, this perfectly reflects what is happening on the hourly timeframe. A weak volatile flat. The pair has been trading between levels 1.2070-1.2150 for several days now.

EUR/USD 1H

The EUR/USD pair was indistinctly trading again on the hourly timeframe on Wednesday, December 9. In principle, this week's trading has been vague. This is clearly seen from the number of times that the price crossed the critical Kijun-sen line. Trades continue to take place within the rising channel, however, even a kind of downward trend (short-term) has formed. At least it is what it appears to be. Thus, the downward corrective movement may continue for some time, however, based on the current volatility and strength of the downward movement, it is perfectly clear how strong the bears are now. Therefore, given the current technical picture, we are more inclined to believe that the upward trend would resume. There will be important events in the European Union today and tomorrow, and they can influence the mood of traders. Thus, volatility may increase at the end of the trading week.

COT report

The EUR/USD pair grew by only 80 points during the last reporting week (November 24-30). But the new Commitment of Traders (COT) report indicates that professional traders are becoming more bullish for the second consecutive week. This time, the "non-commercial" group opened 4,300 new Buy-contracts (longs) and closed 300 sell-contracts (shorts). These numbers are not great. Even the general changes in favor of the bulls over the past two weeks cannot be called "breaking the bearish trend". However, the net position of non-commercial traders has been growing for two consecutive weeks. And, apparently, it began to grow synchronously with the resumption of the euro/dollar pair's growth. Unfortunately, COT reports come out three days late. Thus, they can be used to determine the trend, but, as is the case with fundamental analysis, technical confirmation is always required for any conclusions drawn from the COT reports. What do we end up with? The number of open Buy-contracts for professional traders remains high at 212,000, and the number of Sell-contracts is three times less than 67,000. The gap between the two began to narrow around September (the second indicator showing the net position of the non-commercial group), but it is currently growing again. Therefore, we still expect the upward trend to end, because this is what the data of the COT report is implying (especially the first indicator). But we need technical confirmation of this.

No important reports or events from the EU and the US on Wednesday. On the one hand, we can conclude that weak volatility from the pair is associated with this. On the other hand, we have been saying for a long time that market participants have been ignoring almost all statistics and many fundamental events for the entire year. Therefore, it is not about the empty calendar. Important and serious topics for the euro/dollar pair are available. But traders don't want to take them into account. We have already said that the European economy is experiencing problems in the fourth quarter and, accordingly, will slow down or contract in this period. But the markets do not take this into account and they still buy the euro. Also, traders ignore possible problems of the European Union related to the ratification of the seven-year budget and the recovery fund, which were blocked by Poland and Hungary.

The US is set to publish its consumer price index for November. Inflation may fall to 1.1% in annual terms. But what difference does it make for the dollar if it has been falling relentlessly in recent weeks? The European Union will sum up the results of the ECB meeting. It is expected that the program to counter the consequences of the PEPP epidemic will be expanded in volume, which may result in the euro's fall. Although, most likely, traders will ignore this information as well. The ECB will also hold a press conference today, which may contain potentially important information.

We have two trading ideas for December 10:

1) Buyers continue to have the initiative, but now there is also a downward trend line. Therefore, you are advised to trade up while aiming for the resistance level of 1.2224 after going through this line. A rebound from the Senkou Span B line (1.2009), which is near the lower line of the rising channel, can also be used as a signal for new long deals. Take Profit in this case can be up to 200 points.

2) Bears remain very weak at the moment and cannot even correct the pair yet, however, the fundamental background allows them to hope for a downward movement. At this time, one can even consider small sales while aiming for the Senkou Span B line (1.2009), since the downward trend line has been formed. Take Profit in this case can be up to 120 points. But short positions are now counter-trend, which means they are associated with increased risks.

Forecast and trading signals for GBP/USD

Explanations for illustrations:

Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.

Support and resistance areas are areas from which the price has repeatedly rebounded off.

Yellow lines are trend lines, trend channels and any other technical patterns.

Indicator 1 on the COT charts is the size of the net position of each category of traders.

Indicator 2 on the COT charts is the size of the net position for the "non-commercial" group.