FX.co ★ EUR/USD: plan for the European session on September 20. COT reports. The euro continues to push in the horizontal channel

Only one signal was formed to enter the market yesterday. I suggest you take a look at the 5-minute chart and figure out what happened. I paid attention to the 0.9993 level in my morning forecast and advised making decisions on entering the market from it. After a breakthrough and reverse test from the bottom up of 0.9993 closer to the middle of the day, a good signal to sell the euro was formed in order to update the lower border of the horizontal channel, which we ultimately did not reach. The downward movement amounted to about 20 points, after which the demand for the euro returned, and trade again moved in the channel.

COT report:

Before talking about the further prospects of the EUR/USD movement, let's look at what happened in the futures market and how the positions of the Commitment of Traders have changed. The Commitment of Traders (COT report) for September 13 logged a decline in short positions and a slight increase in long positions. This suggests that the European Central Bank meeting and a sharp increase in interest rates immediately by 0.75% influenced traders who preferred to take profits at current levels even despite the approaching Federal Reserve meeting. This week, the Open Market Committee is likely to raise rates by at least 0.75%, but there are rumors in the market that some politicians are in favor of raising the rate by 100 basis points, or 1.0%. This will lead to increased bearish momentum and the euro's new collapse against the US dollar. Considering the US inflation data for August of this year, the development of such a scenario cannot be ruled out. However, it should be understood that the European Central Bank is also no longer "sitting on the sidelines" and is starting to catch up with the Federal Reserve, reducing the gap between returns. This plays on the side of long-term bulls of the euro, who are counting on a recovery in demand for risky assets. The COT report indicated that long non-commercial positions rose by 2,501 to 207,778, while short non-commercial positions decreased by 22,011 to 219,615. At the end of the week, the overall non-commercial net position remained negative, but rose slightly to -11,832 from -36,349, which indicates the continuation of the alignment of the upward correction for the pair and groping the bottom. The weekly closing price increased and amounted to 0.9980 against 0.9917.

When to go long on EUR/USD:

Among the data that will be released in the first half of the day, you could pay attention to reports on the German producer price index and the balance of the current account of the ECB's balance of payments. And although these figures do not play a big role in determining the euro's direction, negative changes in these indicators may weaken the demand for risky assets. What ECB President Christine Lagarde will tell us is much more important, whose speech is scheduled for the afternoon. If she touches the topic of monetary policy, the bulls can take advantage of the moment and take a good look at the bears' stops before tomorrow's Fed meeting. In case of a negative reaction to the data, forming a false breakout near the middle of the 0.9993 horizontal channel will be a reason to open long positions in continuation of developing the bull market. In this case, it will be possible to count on building a correction and updating the resistance at 1.0040, formed on the basis of today's Asian session. Only a breakthrough and test from top to bottom of this range will allow getting to the high in the 1.0084 area, providing an additional signal to enter long positions with the possibility of a larger move up to 1.0118. The farthest target will be the area of 1.0154, where I recommend taking profits.

In case EUR/USD falls and the bulls are not active at 0.9993, and moving averages are also passing there, playing on the bulls' side, nothing special will happen, since trading will remain within the horizontal channel. This will only lead to an update of 0.9947 - the lower border of the channel. I recommend buying only on a false breakout from this level. I advise you to open long positions on EUR/USD immediately for a rebound only from the low of 0.9902, or even lower - in the parity area from 0.98677, counting on an upward correction of 30-35 points within the day.

When to go short on EUR/USD:

Bears are in control of the upper border of the horizontal channel, but each time they allow it to shift slightly upwards, which at some point may result in a breakthrough and a major upswing of the pair - this would be especially relevant before tomorrow's results of the Federal Reserve meeting. A good option for selling would be a false breakout in the area of the nearest resistance at 1.0040, formed as a result of the Asian session. Growth to this level may occur after the release of a number of positive fundamental statistics on Germany. Failure to consolidate at 1.0040 can push the euro to move down to the area of 0.9993, where the struggle for parity will begin again. A breakdown and consolidation below this range, as well as a reverse test from the bottom up, can create another sell signal with the removal of bulls' stop orders and the euro to fall with the prospect of updating 0.9947, where I recommend taking profits. It is unlikely for the pair to go beyond this level before tomorrow's Fed meeting. But if this happens, the next support will be the 0.9902 area.

In case EUR/USD moves up during the European session, as well as the absence of bears at 1.0040, we can expect a larger upward move for the pair. Then I advise you to postpone short positions until 1.0084. Forming a false breakout there will be a new starting point for entering short positions. You can sell EUR/USD immediately for a rebound from the high of 1.0118, or even higher - from 1.0154, counting on a downward correction of 30-35 points.

Indicator signals:

Moving averages

Trading is conducted above 30 and 50 moving averages, which indicates a slight advantage for the bulls.

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 lower border of the indicator in the area of 0.9990 will lead to a fall in the euro. Surpassing the upper border of the indicator in the area of 1.0055 can push the euro to rise.

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.