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

The European currency continued to fall against the US dollar yesterday afternoon and judging by what is happening in the market - the bulls are preparing to take another blow after the US inflation report. Let's take a look at the 5-minute chart and talk about what happened. It is clearly seen how during the European session the bulls are trying to form a false breakout in the 1.1727 area, which results in creating a signal to buy the euro. However, the pair did not rapidly grow, and after very weak data on the sentiment index in the business environment in Germany and the eurozone, the pressure on the pair returned. In the second half of the day, we did not reach the levels I indicated, so there were no signals to enter the market. Ahead of the release of important data on the US economy, a similar report on the consumer price index in Germany will be published in the morning, which, according to economists' forecasts, will show an increase of 0.9%. If the report turns out to be worse than forecasts, it will become another signal for the euro to fall. To prevent this, the bulls will focus on protecting the 1.1711 support, which was formed yesterday afternoon. Forming a false breakout there creates the first signal to open long positions in hopes of an upward correction of the pair. An equally important task for the bulls will be to return to the control of the resistance at 1.1738, just below which the moving averages, which are on the side of the bears, pass. Only a breakthrough of this area and its reverse test from top to bottom will generate a signal to open long positions in hopes that the pair would rise to the level of 1.1762, where I recommend taking profits. A further challenge will be to update a high like 1.1787. In case EUR/USD falls during the European session and the bulls are not active around 1.1711, I advise you to wait for the update of the next large low at 1.1682, or buy EUR/USD immediately on a rebound from the support of 1.1643, counting on an upward correction of 15-20 points within the day...

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

The bears managed to cope with the task and achieved a further update of the daily lows, which keeps the pair's bearish trend. Trading also continues below the moving averages, which indicates the bears' advantage. The main task of the bears' is to protect the resistance at 1.1738, which can be tested in case we receive strong inflation data in Germany. However, this is unlikely to be the main problem for the bears. Forming a false breakout in the area of 1.1738 will be a signal to open short positions in hopes of a further downward correction to the area of today's low at 1.1711. A breakthrough and retest of this range would quickly push EUR/USD to the 1.1682 low. The next target will be the area of 1.1643, where I recommend taking profits. In case EUR/USD grows during the European session and the bulls are not active at the level of 1.1738, it is best to postpone selling until the test of the larger resistance at 1.1762. You can also open short positions there only after the formation of a false breakout. I recommend selling the pair immediately on a rebound counting on a downward correction of 15-20 points only from a high like 1.1787.

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 below 30 and 50 moving averages, which indicates the advantage of the bears.

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 lower border of the indicator in the area of 1.1711 will increase pressure on the euro.

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.