To open long positions on EURUSD, you need:
We can say that euro buyers are in no hurry to return to the market even after a small downward correction, which could be observed today in the first half of the day. Let's look at the 5-minute chart and discuss where it was possible and necessary to enter the market. After a small downward correction of the pair, it is visible how several false breakouts at the level of 1.1783 formed good entry points into long positions to continue the upward trend. However, the lack of important fundamental statistics in the first half of the day negatively affects the pair's volatility. From a technical point of view, nothing has changed much, and I decided not to revise the level of 1.1783. The second half of the day promises to be just as calm. Attention will be drawn to the report on the US manufacturing index, which may decline quite noticeably in August this year, which will lead to a weakening of the US dollar and a new wave of euro growth. As long as trading is conducted above or near the level of 1.1783, the probability of further growth of the pair remains very high. The first target of the bulls in this scenario will be the resistance of 1.1803, which is the main focus. A breakthrough of this area and its reverse test from top to bottom will form a new signal to open long positions in the continuation of the upward correction to the level of 1.1829. A more distant target will be the area of 1.1856, where I recommend fixing the profits. In the scenario of strong data on the US, which should be much better than economists' forecasts and a decline in EUR/USD, I advise you not to rush into purchases. A fairly important task for traders will be to protect the support of 1.1766, in which there are moving averages that play on the side of the bulls. The formation of a false breakdown will lead to the entry point into long positions, allowing you to build the lower border of a new ascending channel. In the scenario of a further decline in EUR/USD during the US session and the absence of bull activity in the area of 1.1766, I advise you to wait for the minimum update in the area of 1.1747 or buy EUR/USD immediately for a rebound from the support of 1.1725, counting on an upward correction of 15-20 points within the day.
To open short positions on EURUSD, you need:
The focus of the bears today will continue to be on the breakdown of the support of 1.1783, which could not be broken below in the first half of the day. A breakout and a reverse test of this level will form a signal to open new short positions, which will push the pair to a minimum of 1.1766, and then even lower - to the area of 1.1747, where I recommend fixing the profits. A more distant target will be the area of 1.1725. In the case of EUR/USD growth during the US session and weak data on the US economy, all sellers should concentrate on the level of 1.1803, which was formed at the end of last week. The formation of a false breakout on it will lead to a new entry point into short positions. If there is no bull activity at this level, I advise you to postpone sales until the test of a larger resistance of 1.1829. It is also possible to open short positions only after the formation of a false breakdown. I advise selling the pair immediately for a rebound based on a downward correction of 15-20 points only from the maximum of 1.1856.
There are no obvious changes in the balance of power in the COT report (Commitment of Traders) for August 3. Moreover, the lack of important fundamental statistics on the eurozone last week and the summer pause forced traders to take a wait-and-see position. The focus was shifted to the data on the US labor market, which was published at the end of last week. However, its results are not taken into account in this COT report. Thus, it seems that everything has remained unchanged. The market movement is again becoming bearish since the data on the number of people employed in the US non-agricultural sector turned out to be much better than economists' forecasts. It allows us to count on an earlier curtailment of the asset purchase program by the Federal Reserve System. 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 indicates that long non-commercial positions decreased from 202,245 to the level of 199,067, while short non-commercial positions decreased from the level of 164,119 to the level of 161,060. By the end of this week, we are waiting for important fundamental statistics on inflation in the US, which can seriously affect the direction of the EUR/USD pair, but provided that the data diverge from economists' forecasts. Many expect that the rate of inflation growth will slow down. If this happens, the euro will regain its position. If the data indicate the continuation of the rapid growth of the CPI, the US dollar continued to strengthen its position against the European currency. At the end of the week, the total non-commercial net position decreased from the level of 38,126 to the level of 38,007. The weekly closing price increased from the level of 1.1804 to the level of 1.1874.
Signals of indicators:
Moving averages
Trading is conducted above 30 and 50 daily moving averages, which indicates the continuation of the upward correction for the pair.
Note: The author considers the period and prices of moving averages on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
Bollinger Bands
In the case of growth, the upper limit of the indicator in the area of 1.1803 will act as a resistance. A break of the lower limit of the indicator in the area of 1.1780 will increase the pressure on the pair.
Description of indicators
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
- MACD indicator (Moving Average Convergence / Divergence - moving average convergence/divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
- Bollinger Bands (Bollinger Bands). Period 20
- Non-profit speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet specific 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 the short and long positions of non-commercial traders.
