FX.co ★ EUR/USD: plan for the European session on August 16. COT reports. Friday's surge could affect the euro's direction and end the bear market

To open long positions on EUR/USD, you need:

The unexpected bull market that we saw last Friday resulted in forming a fairly large number of signals to open both long and short positions. Nobody expected a unidirectional upward movement, especially at the end of the week amid the absence of important fundamental reports. Let's take a look at the 5-minute chart and break down the trades. Consolidating above the level of 1.1747 and trading through it in the second half of the day has formed the first signal to buy the euro, which led to a recovery in the resistance area of 1.1766. It seemed that everything had to end there. The formation of a false breakout at 1.1766 resulted in creating a sell signal, but after a while the bulls took control of this level as well, having tested it from top to bottom and created another entry point into long positions. As a result, the resistance at 1.1787 was also easily broken, and we stopped only at the high of 1.1808. No important fundamental reports for today and it is possible that new buyers of the euro will pick up Friday's initiative and continue to build up long positions. Surpassing the 1.1803 area and its reverse test from top to bottom will create a signal to buy the euro in hopes of rising to the level of 1.1829, and then to the high of 1.1756, where I recommend taking profits. The next task is to update 1.1898, which will be a clear signal for the formation of a new bullish trend, which is quite important for the medium-term perspective of the pair. In case EUR/USD falls in the first half of the day, a serious task for the bulls is to protect the support at 1.1783, just below which are the moving averages, playing on the side of the bulls. Forming a false breakout there will lead to a long entry point. In case EUR/USD falls during the European session and the bulls are not active in the 1.1783 area, I advise you to wait for an update to 1.1766, or buy EUR/USD immediately on a rebound from the 1.1747 support counting on an upward correction of 15-20 points within the day.

To open short positions on EUR/USD, you need:

The bears are clearly in no hurry to return to the market after the rapid growth on Friday. The bears will focus on protecting the resistance at 1.1803. The absence of important fundamental reports on the euro area will not be good for the bears, as the upward trend may continue. Forming a false breakout at the level of 1.1803 creates the first signal to open short positions in hopes of a return of the bear market, and the initial target will be to update the support at 1.1783. A breakthrough and reverse test of this level generates a signal to open new short positions, which will push the pair to the low of 1.1766, and then even lower - to the 1.1747 area, where I recommend taking profits. The next target will be 1.1725. In case EUR/USD grows further during the European session and the bulls are not active at the level of 1.1803, it is best to postpone selling until the test of the larger resistance at 1.1829. You can also open short positions there only after the formation of a false breakout. I advise you to sell the pair immediately on a rebound counting on a downward correction of 15-20 points only from a high like 1.1856.

There are no obvious changes in the balance of power in the Commitment of Traders (COT) report for August 3. The absence of important fundamental statistics on the eurozone last week and the summer pause forced traders to take a wait-and-see attitude. The focus was shifted to the US labor market data, which was published late last week, but this COT report does not include its results, so it seems that everything has remained unchanged. In fact, the market movement is acquiring a bearish character again, as the data on the number of employees in the non-agricultural sector of the United States turned out to be much better than the forecasts of economists, which allows counting on an earlier curtailment of the asset purchase program by the Federal Reserve. Representatives of the committee have already started talking about this at the beginning of this week, whose speeches will continue throughout the week. The COT report indicated that long non-commercial positions fell from 202,245 to 199,067, while short non-commercial positions fell from 164,119 to 161,060. We will only receive important fundamental statistics on US inflation by the end of the week, which may seriously affect the direction of the EUR/USD pair, but on condition that the data diverge from the forecasts of economists. Many expect inflation to slow down. If this happens, the euro will regain its position. If the data indicate continued rapid growth in CPI, the US dollar continued to strengthen its positions against the European currency. At the end of the week, the total non-commercial net position decreased from 38,126 to 38,007. The weekly closing price increased from 1.1804 to 1.1874.

Indicator signals:

Trading is carried out above 30 and 50 moving averages, which is a clear application for the formation of a new bullish trend.

Moving averages

Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differs from the general definition of the classic daily moving averages on the daily D1 chart.

Bollinger Bands

Volatility is very low, which does not provide signals to enter the market.

Description of indicators

• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
• MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-commercial 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 short and long positions of non-commercial traders.