FX.co ★ EUR/USD: plan for the American session on December 21 (analysis of morning deals)

To open long positions on EURUSD, you need to:

In the first half of the day, three signals were formed at once to enter the market, two of which were quite profitable, and one recorded losses. Let's take a look at the 5-minute chart and figure out what happened. In my morning forecast, I paid attention to the level of 1.2181 and recommended opening short positions from it, which happened. The test of this level from the bottom up after the bears' attempt to continue the pair's downward movement in the first half of the day formed a sell signal for the euro. However, it turned out to be unprofitable. As a result, the pair returned to the resistance area of 1.2226, from where I also recommended selling the euro. The downward movement from the level of 1.2226 brought more than 45 points of profit. It was necessary to buy EUR/USD immediately on the rebound from the low of 1.2130, which I spoke about in detail in my morning forecast, which allowed me to take another 50 points from the market.

In the second half of the day, the focus of buyers will be shifted to a return to control of the resistance of 1.2181. Only its top-down test will form a new signal to open long positions, the main goal of which will be to return above the area of 1.2226, from which the pair fell in the first half of the day today. Only a breakdown of 1.2226 will indicate the resumption of an upward trend in the market, which can lead to the area of 1.2271, where I recommend fixing the profits. In the scenario of a further decline in EUR/USD, which is more likely in the current conditions, it is better to wait for a re-update of the minimum of 1.2130, however, I recommend opening long positions only if a false breakdown is formed, as well as after good data on the Eurozone consumer confidence indicator, which is scheduled to be released in the second half of the day. I recommend buying EUR/USD immediately for a rebound from the minimum of 1.2083, based on an upward correction of 25-30 points within the day.

To open short positions on EURUSD, you need to:

Sellers of the euro are aimed at breaking the support of 1.2130, which they failed to do in the first half of the day. The situation in the UK with a new type of coronavirus infection puts the current supply chains, including in the EU, on the verge of disruption, which is accordingly manifested in the exchange rate of the European currency. Only a consolidation below 1.2130 and a test of this level on the reverse side will increase the pressure on the pair, which will form a good entry point into short positions. The main target of the bears, in this case, will be the area of 1.2083, where I recommend fixing the profits. An equally important task for sellers of the euro will be to protect the support of 1.2181, where the next formation of a false breakout in the second half of the day forms a signal to enter short positions. If the bulls manage to pick up the level of 1.2181, it is better not to rush to sell. In this case, I recommend opening short positions only after the formation of a false breakout in the area of 1.2226. You can sell the euro immediately for a rebound after testing the maximum of 1.2271 with the aim of a downward correction of 25-30 points within the day.

Let me remind you that the COT report (Commitment of Traders) for December 15 recorded an increase in short positions and a reduction in long ones. Although buyers of risky assets believe in the continuation of the bull market, especially against the background of the expectation of vaccination in the Eurozone, which will begin from December 25 to 27, however, the rush to buy at current highs has decreased. Thus, long non-profit positions decreased from the level of 222,521 to the level of 218,710, while short non-profit positions increased from the level of 66,092 to the level of 76,877. The total non-profit net position fell to 141,833 from 156,429 a week earlier. The growth of the delta, which was observed for three consecutive weeks, has stopped, thus, it is unlikely that you can expect rapid growth of the euro at the end of this year. Talk of a further major recovery will be possible only after European leaders agree with the UK on a new trade agreement.

Signals of indicators:

Moving averages

Trading is below 30 and 50 daily moving averages, which indicates a continued decline in the euro.

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

In the case of an upward correction, the average border of the indicator around 1.2210 will act as a resistance.

Description of indicators

• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
• MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-profit speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
• Long non-commercial positions represent the total long open position of non-commercial traders.
• Short non-commercial positions represent the total short open position of non-commercial traders.
• Total non-commercial net position is the difference between the short and long positions of non-commercial traders.