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

Yesterday, before and after the Federal Reserve meeting, there were several good signals for entering the market, which I discussed in more detail in the afternoon. Now let's analyze them and see where you can and should have entered the market. The results of the Fed meeting were quite expected, which did not cause the situation to significantly change, but further purchases at current highs can be very treacherous. Let's look at the 5-minute chart. We see that after the morning sell signal from the 1.1763 level, the pair went down about 40 points, but then returned to this resistance. Consolidating at this level, a new signal formed, but for buying the euro, which led to an update of the resistance of 1.1802, from which I advised opening short positions immediately for a rebound. As for the current situation, you need to be extremely careful with purchasing at highs. It is best to wait for a downward correction to the support area of 1.1756 and a false breakout forms there, and only then should you buy the euro in anticipation of a breakout and consolidation above the resistance of 1.1802. This scenario will give the market a new bullish momentum and open a direct path to the area of 1.1830 and 1.1866, where I recommend taking profits. If there is no special desire to buy the euro from the bulls in the 1.1756 area, it is best to postpone long positions until the low of 1.1704 has been updated and buy EUR/USD from there immediately on the rebound in anticipation of a correction of 25-30 points within the day.

Let me remind you that the Commitment of Traders (COT) reports for July 21 recorded a sharp increase in long positions and a reduction in short ones, which tells us about the return of investors' interest in risky assets amid confusion that is happening in the US due to the coronavirus, the presidential election and the fall in Treasury yields. The report shows an increase in long non-commercial positions from 194,252 to 204,185, while short non-commercial positions decreased from 83,340 to 79,138. As a result, the positive non-commercial net position increased to 125,047, against 110,912, which indicates an increase in interest in buying risky assets even at the current, rather high prices.

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

The bears should make another attempt to stop the bull market, and to do this, you need to protect the high of 1.1802. Forming a false breakout there will be a signal to open short positions in the euro while expecting a decline to the support of 1.1756, just below which the moving averages passes. An equally important goal is a breakout and consolidating below this range, which will form an additional signal to sell GBP/USD in order to fall to a low of 1.1704, where I recommend taking profits. A break in this range will start a downward correction for the pound and lead to a low of 1.1648. If euro sellers are not active in the resistance area of 1.1802 in the first half of the day, and today there are quite a lot of important reports on the state of the German economy and the eurozone, it is best to postpone short positions until the highs of 1.1830 and 1.1866 are updated and sell there for a rebound in anticipation of a correction of 25-30 points within the day.

Indicator signals:

Moving averages

Trading is carried out slightly above 30 and 50 moving averages, which indicates that a downward correction could form for the euro

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 breakout of the upper border of the indicator around 1.1802 will lead to an increase in the euro. A breakout of the lower border of the indicator around 1.1740 will increase the likelihood of a downward correction in 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) Fast EMA period 12. Slow EMA period to 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-commercial traders are speculators, 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.
• The total non-commercial net position is the difference between short and long positions of non-commercial traders.