FX.co ★ EUR/USD: trading plan for the US session on December 21st (analysis of morning deals). The euro prepares for a new decline

In my morning forecast, I drew attention to the level of 1.0931 and planned to make entry decisions based on it. Let's look at the 5-minute chart and analyze what happened. A decline occurred, but it didn't reach the point of forming a false breakout at this level. Very low intraday volatility, warned about in the morning forecast, became the main reason for the absence of entry points into the market. The technical picture remained unchanged for the second half of the day.

To open long positions on EUR/USD:

The absence of Eurozone statistics affected trade volume and volatility. However, we have important economic data on the U.S. horizon. Figures on initial jobless claims are expected, but more interestingly, there will be a review towards an increase in GDP for the third quarter of this year. The Philadelphia Federal Reserve Manufacturing Index is unlikely to play a significant role in determining market direction. And if the data does not disappoint, for example, if GDP is revised upwards, pressure on the pair will undoubtedly increase. In this case, I will act similarly to the morning strategy: forming a false breakout around 1.0931 will allow the market to return to the 1.0974 area—resistance formed based on yesterday's results. After breaking through and updating this range from top to bottom, I will enter a buy with a chance of developing an upward trend and the prospect of updating 1.1009. The ultimate target will be this month's new high at 1.1041, where I will take profit. A larger drop in the pair can be expected in the case of a decline in EUR/USD and a lack of activity at 1.0931 in the first half of the day. In this case, I plan to enter the market only after forming a false breakout around 1.0893. I will consider opening long positions immediately on a rebound from 1.0857 with the target of an upward correction of 30-35 points within the day.

To open short positions on EUR/USD:

Sellers show no particular activity, clearly fearing the continuation of the bullish market development. Of course, in the current situation, the most suitable scenario for me would be growth and forming a false breakout around 1.0974. Getting a sell signal from there, I expect an update of the lower boundary of the sideways channel and the nearest support at 1.0931, which fell just a couple of points short of the morning test. Only after breaking through and consolidating below this range, as well as a reverse test from bottom to top, do I expect to receive another sell signal with an exit to 1.0893. The ultimate target will be a minimum of 1.0857, where I will take profit. In case of upward movement of EUR/USD during the U.S. session after weak U.S. data and the absence of bears at 1.0974, it is better to postpone sales until testing the next resistance at 1.1009. I will also sell there, but only after an unsuccessful consolidation. I plan to open short positions immediately on a rebound from 1.1041 with the target of a downward correction of 30-35 points.

In the COT report (Commitment of Traders) as of December 12, there was a reduction in long positions and an increase in short ones. The December meeting of the U.S. Federal Reserve and the turn towards a more dovish stance, along with the European Central Bank's firm position, had little impact on the positioning of major players, as the advantage of buyers of risk assets is more than evident. In the near future, a series of reports related to inflation in the Eurozone and the U.S. will be released, which will more clearly clarify the Fed's position on interest rates next year. But regardless of the data, expectations for further strengthening the European currency in the medium term will continue to grow. The COT report indicates that non-commercial long positions decreased by only 3,847 to 231,837, while non-commercial short positions increased by 1,186 to 84,510. As a result, the spread between long and short positions decreased by 3,599.

Indicator Signals:

Moving Averages:

Trading is conducted around the 30 and 50-day moving averages, indicating a sideways market character.

Bollinger Bands:

In case of a decline, the lower boundary of the indicator, around 1.0931, will act as support.

Description of Indicators:

• Moving Average (50-day): Yellow color on the chart.
• Moving Average (30-day): Green color on the chart.
• MACD Indicator (12-26-9): Fast EMA period 12, Slow EMA period 26, SMA period 9.
• Bollinger Bands (20): Period 20.
• Non-commercial traders: Speculators, including individual traders, hedge funds, and large institutions, use the futures market for speculative purposes and meet certain requirements.
• Long non-commercial positions: The total long open positions of non-commercial traders.
• Short non-commercial positions: The total short open positions of non-commercial traders.
• Total non-commercial net position: The difference between short and long positions of non-commercial traders.