FX.co ★ Forecast and trading signals for EUR/USD on December 11. COT report. Analysis of Thursday. Recommendations for Friday

EUR/USD 15M

The linear regression channels are directed in different directions on the 15-minute timeframe, however, by and large, they are not important now, since they can change their direction very often in a flat, which does not mean that a trend will change on the hourly chart.

EUR/USD 1H

The EUR/USD pair was indistinctly trading again and it was not very logical on the hourly timeframe on Thursday, December 10. However, all the same, the movements were also quite valid. However, let's start with the technical picture. First, the pair crossed the Kijun-sen line a couple more times, confirming the status of a flat movement at this time. Second, the quotes have settled above the downward trend line, breaking the short-term downward trend. However, the upward movement did not continue, which is no longer surprising. Thus, we tried to visualize what is happening with a rectangle that shows the horizontal movement now. Now all that we have to do is to wait for the price to leave this horizontal channel. Take note that the pair continues to trade around 2.5-year highs all this time. Also, do not forget that the rising channel is still in action, the pair moves within it all this time. However, at this time the markets are in turmoil again and cannot determine the direction.

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.

The European Central Bank announced its decisions following a two-day meeting, and market participants were not surprised. Key rates remained unchanged, and the PEPP program (countering the economic consequences of the pandemic) was expanded by 500 billion euros and extended by nine months. This news, oddly enough, provided little support for the euro. In addition, the EU summit has started in the European Union, Poland and Hungary agreed to withdraw their decision to block the budget for 2021-2027 and the recovery fund. Now all that we have to do is to wait for the details of the agreement on a mechanism for observing the rule of law. The US inflation report was also released, which showed that the value did not decrease, contrary to forecasts, and reached 1.2% y/y. The consumer price index excluding food and energy products, reaching1.6% y/y, which is in line with the previous month. Some may be glad for the US inflation, but considering how the dollar has weakened in recent months, such inflation is not surprising.

The US is set to publish the consumer confidence index from the University of Michigan. However, this indicator is more formal and is unlikely to cause a reaction from the market. Germany will release its inflation report for November, which is also unlikely to greatly interest market participants. Therefore, we might receive more interesting information from Brussels, where the EU summit will proceed. However, we already know the most important news - the recovery fund and the seven-year budget will not be blocked.

We have two trading ideas for December 11:

1) Buyers continue to own the initiative, but now there is also a horizontal channel, which is clearly visible in the chart. Therefore, you are advised to go back to trading up while aiming for resistance levels 1.2224 and 1.2328 after breaking its upper line. Take Profit in this case can range from 30 to 130 points. At this time, we can describe the pair's movement as flat.

2) Bears remain very weak at this time and cannot even correct the pair yet, however, the fundamental background allows them to hope for a downward movement. At the same time, one should confirm the movement in order to start trading down. We advise you to wait until the rising channel and the Senkou Span B line (1.2029) have been overcome. And only after that should you consider the possibilities of opening sell positions.

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.