FX.co ★ EUR/USD: trading plan for European session for November 29, 2022. Commitments of Traders. Overview of yesterday's trading. EUR recovers quickly

Yesterday, a few entry signals were generated, but not all of them turned out to be profitable. Let's take a look at the 5-minute chart to get a picture of what happened. In the previous review, we focused on the mark of 1.0385 where we considered entering the market. Growth and a false breakout through this level in the first half of the day produced a sell signal. Yet, the price did not fall steeply. As a result, the bulls broke above the barrier on the third attempt, and a loss-taking stage began. In the second half of the day, with rapid growth in the euro, a false breakout through at 1.0475 seemed to make a nice sell signal, but even then the fall did not take place right away. The long-awaited sell signal was generated only after the price went up by 20 pips and then returned below 1.0475 and retested it. That triggered a mass sell-off, and the euro plunged by over 100 pips.

When to go long on EUR/USD:

With China's unrest easing, risk assets, including the euro, went up in the first half of the day. Meanwhile, the greenback strengthened following the statements of some Fed representatives who said that the regulator did not plan to change the stance on interest rates in December. The release of a row of macro reports, including the eurozone's Consumer Confidence and Germany's Consumer Price Index, is expected in the first half of the day, which may help the euro to recover. A sharp increase in these indicators will boost demand for risky assets, which in turn will allow the bulls partially offset yesterday's losses. Meanwhile, the pair will be trapped within the sideways channel. The speech by ECB Executive Board member Isabel Schnabel is unlikely to have any effect on EUR/USD. A false breakout through 1.0377 will produce a buy signal, and the pair will return to 1.0432. In the event of a breakout and a test of this range to the downside, EUR/USD may head toward 1.0492. Above this range, there is an area of 1.0525. A breakout of this mark will trigger a row of bearish stop orders and generate an additional buy signal with the target at 1.0568 where a profit-taking stage may begin. If EUR/USD goes down when there is no bullish activity at 1.0377, the pressure on the euro will soar, and a bearish correction may occur. A breakout through 1.0377 will lead to the pair's fall to 1.0333 support where long positions could be considered after a false breakout. Also, it will be possible to buy EUR/USD on a bounce off 1.0298, or even lower, in the area of 1.0261, allowing a bullish correction of 30-35 pips intraday.

When to go short on EUR/USD:

Obviously, the bears took advantage of yesterday's statements by the Fed officials. Today, it will become possible to go short after the price approaches 1.0432 resistance. The sellers should regain control over 1.0377. Consolidation below this range may cause an increase in the pressure on the euro and trigger a significant bearish correction. A breakout and a retest of the 1.0377 level to the upside will make a sell signal and trigger a row of bullish stop orders, and the pair will fall to 1.0333 where bullish activity already increased during the Asian session. The most distant target is seen in the area of 1.0298 where a profit-taking stage may begin. If EUR/USD goes up during the European session, only a false breakout through 1.0432 will create a nice sell entry point. In case of no bearish activity there, we may expect the price to hit the 1.0475 mark. In addition, it would be wiser to go short after a false breakout only. Also, it will be possible to sell EUR/USD on a bounce off the 1.0525 high, or even higher, at 1.0568, allowing a bearish correction of 30-35 pips.

Commitments of Traders:

The COT report from November 15 logged an increase in both short and long positions. There has been growing speculation lately on the Fed's less-aggressive stance on monetary tightening which could be announced in December. However, such assumptions contradict the latest US retail sales data for October, which came better than expected, proving high inflationary pressure at the year-end. For this reason, the recent US inflation report should be treated cautiously as the CPI indicated easing inflationary pressure. Apparently, the Federal Reserve will stick to its hawkish agenda, going ahead with sharp rate hikes. When it comes to the euro, demand for risky assets has grown a bit. Nevertheless, following the latest EU statistics, especially GDP, the pair is unlikely to show another explosive jump by the year-end. According to the COT report, long non-commercial positions rose by 7,052 to 239,369 and short non-commercial positions increased by 1,985 to 126,703. The total non-commercial net positions remained positive at 112,666 last week versus 107,599 a week ago. In other words, investors keep taking advantage of the situation and buying the undervalued euro even above the parity level. Traders are accumulating long positions, hoping for a resolution to the crisis and betting on a stronger euro in the long term. The weekly closing price rose to 1.0390 versus 1.0104.

Indicator signals:

Moving averages

Trading is carried out in the area of the 30-day and 50-day moving averages, reflecting market uncertainty.

Note: The period and prices of moving averages are viewed by the author on the hourly chart and differ from the general definition of classic daily moving averages on the daily chart.

Bollinger Bands

The lower band at 1.0298 stands as support. Resistance is seen at 1.0465 in line with the upper band.

Indicator description:

• Moving average (MA) determines the current trend by smoothing volatility and noise. Period 50. Colored yellow on the chart.
• Moving average (MA) determines the current trend by smoothing volatility and noise. Period 30. Colored green on the chart.
• Moving Average Convergence/Divergence (MACD). Fast EMA 12. Slow EMA 26. SMA 9.
• Bollinger Bands. Period 20
• Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements.
• Long non-commercial positions are the total long position of non-commercial traders.
• Non-commercial short positions are the total short position of non-commercial traders.
• Total non-commercial net position is the difference between the short and long positions of non-commercial traders.