FX.co ★ EUR/USD: plan for the American session on December 28 (analysis of morning deals)

To open long positions on EURUSD, you need to:

In my morning forecast, I paid attention to purchases after the breakdown and consolidation above the level of 1.2218. Let's take a look at the 5-minute chart and analyze what happened. It can be seen how the bulls are firmly fixed above 1.2218 and against the background of the lack of important fundamental statistics, they are gradually pushing the euro up to the resistance of 1.2254. The top-down test of the level of 1.2218 was a signal to open long positions. However, before the update of the level of 1.2254, we were 4 points short. In general, the upward movement in the first half of the day turned out to be quite good.

The sharp movement of the pair down to the area of 1.2218 and its breakdown indicates that there is no major player in the market who would be able to protect this range inside the day. In this regard, the relevance of the forecast for the first half of the day is already moving to the second. Larger players will continue to focus on protecting the support of 1.2174. Only the formation of a false breakout there in the second half will lead to the formation of a signal to open long positions in the euro. However, given the lack of important fundamental statistics and low trading volume in the last week before the New Year, you can not count on serious activity in the area of 1.2174. In the absence of any action in the return of EUR/USD to the support of 1.2174, I recommend postponing long positions until the update of last week's low in the area of 1.2130. You can also buy the euro immediately on the rebound from the new local minimum in the area of 1.2083, based on a correction of 20-25 points within the day. It will be possible to say that the buyers of the euro managed to return the market under their control only after the breakout and consolidation above the resistance of 1.2218. However, only a test of this level from top to bottom, by analogy with this morning's purchase, forms an additional signal to open long positions in the euro with the main goal of returning to the resistance of 1.2254, where I recommend fixing the profits.

To open short positions on EURUSD, you need to:

Sellers are now trying to regain control of the level of 1.2218, which they missed today in the first half of the day. A return to this area and consolidation below, with the test of 1.2218 already from the bottom up, forms a signal to open short positions. The main target of the bears will be to update the minimum of 1.2174, where I recommend fixing the profits. It should be understood that only fixing below this range and testing it from the reverse side will increase the pressure on the pair, which will form a new entry point into short positions. The main target of the bears will be the area around 1.2130. We can hardly expect a breakout of this range at the beginning of this week. However, if this happens, a larger downward movement to the area of 1.2083 is not excluded, and the key target of the bears at the end of the year will be the area of 1.2042, where I recommend fixing the profits. It is worth noting that in the second half of the day there are data on the German consumer price index, which is unlikely to seriously affect the market, however, given the lack of other fundamental data, it is necessary to pay attention to it. If there is no activity of bears at the level of 1.2218, I recommend to postpone short positions until the test of the maximum of 1.2254 or sell EUR/USD immediately on the rebound from the resistance of 1.2304 in the expectation of a correction of 20-25 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 start of vaccination in the Eurozone, which started this weekend, 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, so it is unlikely that you can expect rapid growth of the euro at the end of this year. It will be possible to talk about further major recovery only after the new year, when the first reports on the economic state of the EU will begin in December 2020.

Signals of indicators:

Moving averages

Trading is above 30 and 50 daily moving averages, which indicates a slight advantage for euro buyers

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

If the pair declines, the lower limit of the indicator around 1.2174 will provide support.

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.