FX.co ★ EUR/USD: plan for the European session on December 21. COT reports. The pair hovered in the horizontal channel in and out

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

A fairly large number of signals to enter the market were formed yesterday. Let's take a look at the 5-minute chart and figure out the entry points. In my morning forecast, I drew attention to the 1.1269 level and advised you to make decisions on entering the market. The bulls' failure to regain control of the resistance at 1.1269 led to forming a signal to sell the euro, after which the pair fell 20 points. However, the bulls did not give up the idea of an upward correction and rose above 1.1269 on the second attempt. A reverse test of this level from top to bottom and their protection led to forming an excellent entry point into long positions, which brought about 20 more points in profit. The consolidation above the resistance 1.1291 turned out to be not so profitable, however, there were several attempts to rise from this level - each by 10 points.

Before we talk about the future prospects of the EUR/USD movement, let's look at what happened in the futures market and how the positions of Commitment of Traders have changed. The Commitment of Traders (COT) report for December 14 revealed that both short and long positions decreased, but the latter decreased slightly more, which led to an increase in the negative delta value. However, it should be noted that this data does not include the results of the meeting of the Federal Reserve and the European Central Bank. But if you look at the overall picture as a whole, trading in the horizontal channel is still preserved and even the meetings of the central banks did not make it possible to decide the pair's succeeding direction. Buyers of risky assets, and now we are talking about the euro, are in no hurry to build up long positions even after the ECB announced that it plans to fully complete its emergency bond purchase program as early as next March - this indicates a change in the bank's policy towards tightening it. On the other hand, the Fed is already planning to raise interest rates by this time, which makes the US dollar more attractive. However, the uncertainty with the new strain of the coronavirus Omicron continues to scare off market participants from active actions: no one wants to buy an overbought dollar, but the cheap euro is not yet a very attractive instrument either. The COT report indicated that long non-commercial positions fell from 194,869 to 189,530, while short non-commercial positions fell from 203,168 to 201,409. This suggests that traders are taking a wait-and-see attitude amid all the uncertainty. with the global economy. At the end of the week, the total non-commercial net position increased its negative value from -8 299 to 11 879. The weekly closing price, due to the horizontal channel, did not change at all - 1.1283 against 1.1283 a week earlier.

The technical picture has not changed much compared to yesterday. Trading continues within the horizontal channel, but it is difficult to say which side the advantage is on. In case the euro falls in the first half of the day, only the formation of a false breakout at the level of 1.1269 will lead to forming a good entry point into long positions. But, besides this, an active upward movement of the pair is necessary. This can be helped by data on the leading index of consumer climate in Germany. If the indicator turns out to be better than economists' forecasts, and its reduction is expected in January 2022, we can count on the pair's recovery. If the bulls are not able to offer anything when 1.1269 is tested, it is better not to rush with long positions. A breakthrough of the channel's lower border could lead to a larger sell-off in the euro. In this case, I advise you to buy EUR/USD only after the next support at 1.1248 is updated, and then, subject to the formation of a false breakout there. It is possible to immediately open long positions on a rebound only from the low in the area of 1.1224, counting on an upward correction of 20-25 points within the day. An equally important task for the bulls is to return to the level of 1.1291. A breakthrough and consolidation above this range will surely bring back risk appetite, which will form an excellent entry point for long positions in order to update the immediate resistance of 1.1315. Going beyond this range can seriously affect the short-term EUR/USD downward trend, so be very careful at this level. A breakthrough and a downside test of 1.1315 would see a larger rally towards the highs of 1.1348 and 1.1381. The next target will be the 1.1415 level, where I recommend taking profits.

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

The bears no longer have much control over the market, so it is better to stick to a sideways trading strategy. The best scenario for selling the euro in the first half of the day is a test of the level of 1.1291. Forming a false breakout there creates an excellent entry point into short positions with the prospect that EUR/USD could collapse to the support area of 1.1269, where the moving averages, playing on the side of the bulls, pass. A breakthrough and retest from the bottom up this range, together with the weak data for the eurozone, creates another signal to enter the market, which will push the pair to an important low like 1.1248. Much depends on this level, since going beyond it will determine the pair's succeeding direction. A breakthrough of 1.1248 would open a straight path to the lows of 1.1224 and 1.1208. The next target will be the support at 1.1188, where I recommend taking profits. In case the pair recovers during the European session and the bears are not active at the level of 1.1291, the optimal scenario would be to sell when a false breakout is formed around 1.1315. Selling EUR/USD immediately on a rebound is possible from the highs: 1.1348 and 1.1381, counting on a downward correction of 15-20 points.

Indicator signals:

Trading is carried out in the area of 30 and 50 moving averages, which indicates the sideways nature of the market.

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

A breakthrough of the upper border of the indicator in the area of 1.1295 will lead to an increase in the euro. A breakout of the lower border of the indicator in the area of 1.1265 will increase the pressure for the pair.

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.