FX.co ★ Forecast and trading signals for EUR/USD on December 29. COT report. Analysis of Monday. Recommendations for Tuesday

EUR/USD 15M

The technical picture is more than eloquent in the 15-minute timeframe. The lowest upward slope of both linear regression channels and the absence of surpassing the 1.2249 level. At any moment, the pair can move down and break the remaining upward trend line on the hourly timeframe.

EUR/USD 1H

The EUR/USD pair could not maintain the downward trend on the hourly timeframe on Monday, December 28, but it kept the upward trend. Recall that the pair was stuck between two trend lines yesterday that sought to reach each other. As a result, traders managed to overcome the upper one, although we can not conclude that there is a clear upward trend at this time. If you look at the entire movement supported by the upward trend line in its entirety, you can clearly see that buyers are unable to overcome the resistance level of 1.2249. Thus, the pair's entire movement looks more like a flat than a trend at this time. At the same time, the upward trend remains in the long term, since we also have a rising channel at our disposal. The lines of the Ichimoku, Senkou Span B and Kijun-sen are currently not valid, since, again, the movement is more like a flat. Thus, we advise you to be cautious with any signals on the pre-New Year week, since false ones are possible.

COT report

The EUR/USD pair increased by 30 points during the last reporting week (December 8-14). Recall that over the past few weeks, the Commitment of Traders (COT) reports have shown an increase in the net position of non-commercial traders. That is, the mood of professional players became more bullish, although before that they were already preparing for a massive sell off of the euro for several months. The non-commercial group closed 5,200 Buy-contracts (longs) and opened 10,800 Sell-contracts (shorts) in the last reporting week. That is, the net position decreased by 16,000, which is quite a lot. Professional players are looking into selling the euro. And if we take the long-term perspective into account, then non-commercial traders continue to lean towards selling the euro. The single currency has been growing for a full nine months. All this time, it has been extremely difficult for the dollar to even adjust. Therefore, the euro is now overbought, and very much so. As for the indicators, they show the same decrease in the net position of non-commercial traders. The green line of the first indicator began to move again to meet the red line (net position of commercial traders), which, we recall, is a signal of the end of the trend. Therefore, we still expect the end of the euro's growth, but at the same time, we remind you that until there are technical signals about the end of the upward trend, it is not recommended to trade down. The new COT report was supposed to be released on Friday, December 25, but it was postponed to Monday due to the celebration of Christmas.

No important event or macroeconomic report for the euro or dollar on Monday. Thus, it is somewhat surprising that the pair's volatility has slightly increased compared to Thursday. The only news of the day was Donald Trump's signing of the 2021 budget, which also includes a $900 billion stimulus package for the economy. Thus, the United States managed to avoid another shutdown.

Nothing interesting happening in the European Union and America right now. Moreover, traders are not even waiting for any important information. Everything is moving smoothly towards the New Year and most politicians have already left for the New Year and Christmas holidays. Or they are preparing to do it. In any case, no major events and actions planned for the coming days. Hence the fundamental background, unless something extraordinary happens, will be nonexistent this week.

We have two trading ideas for December 29:

1) Buyers are trying to get the initiative back into their own hands. They managed to stay above the trendline, so they have a chance to rise towards the resistance level of 1.2249. And if the pair manages to surpass it - to the 1.2316 level. Take Profit in this case can range from 30 to 90 points. Rebounding from the Kijun-sen line or the trend line can be used as a signal. However, with the same success, the pair's quotes may be below the upward trend line.

2) Bears remain very weak at this time and have failed to surpass the weak upward trend line. But they let the bulls above their trend line. Thus, you are advised to open short positions if the bears manage to overcome the lower line of the rising channel while aiming for the support levels of 1.2122 and 1.2062. Take Profit in this case can range from 20 to 80 points.

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.