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27.01.202113:57 Forex Analysis & Reviews: EUR/USD: plan for the US session on January 27 (analysis of morning trades)

To open long positions on EURUSD, you need to:

Today, in the first half of the day, the euro declined against the US dollar, however, the volatility remained extremely low. On the 5-minute chart, you can see a breakout of the support level of 1.2145, however, it was not possible to enter short positions from it, since there was no test on the reverse side. Most likely, the trade will continue to be conducted in a side-channel until the publication of the Federal Reserve's monetary policy decision.

Exchange Rates 27.01.2021 analysis

The focus of euro buyers in the US session will now be placed at the level of 1.2145. Only a break in this range with a top-down test will form a good signal to enter long positions to reach a maximum of 1.2181, where I recommend taking the profit. The longer-term task of the euro buyers is to update the maximum of 1.2220, and then to reach the level of 1.2260. Only the statements made by Federal Reserve Chairman Jerome Powell regarding the super-soft monetary policy can lead to such a sharp activity of buyers. In the scenario of a further decline in the euro, I recommend looking at long positions only after the formation of a false breakdown in the support area of 1.2110. If the bulls do not show activity, it is best to postpone buying EUR/USD until the test of the minimum of 1.2055, from which you can open long positions immediately for a rebound in the expectation of an upward movement of 20-25 points within the day.

To open short positions on EURUSD, you need to:

An important task of the bears is to maintain control over the level of 1.2145 and only the formation of a false breakout in the second half of the day will be a signal to open short positions with the aim of further downward correction to the support area of 1.2110, where the euro's fall was stopped yesterday. A confident breakdown of this level and its test from the bottom-up forms an excellent signal to open short positions with the aim of a larger downward correction to the support area of 1.2055. However, there will be such a sharp fall in the euro, provided that Jerome Powell in his speech makes hints about the curtailment of the bond purchase program. Most likely, below the level of 1.2110, a fairly large number of stop orders will be placed by buyers who are still counting on the resumption of the bullish trend from January 18. Their demolition will also put serious pressure on the euro and lead to a rapid fall of the pair to the area of this year's low. In the scenario of EUR/USD growth in the second half of the day above the resistance of 1.2145, it is better not to rush to sell. I recommend waiting for the update of the area of 1.2181 and opening short positions from there, provided that a false breakout is formed. You can sell EUR / USD immediately for a rebound only from the maximum of 1.2220, based on a downward correction of 20-25 points within the day.

Exchange Rates 27.01.2021 analysis

Let me remind you that the COT report (Commitment of Traders) for January 19 recorded a sharp increase in long positions and a slight increase in short ones. Despite all the incoming fundamental data and the continuation of several quarantine restrictions until February this year in many European countries, buyers of risky assets continue to believe in a bullish trend. Especially the demand appears at each significant downward correction from the highs of this year, which allows new major players to enter the market. Vaccination disruptions in Europe are preventing buyers of risky assets from building up their positions more actively, as are weak eurozone fundamentals. However, the prospect of lifting the quarantine will keep the market positive. The risk of extending the quarantine measures in February of this year is still a deterrent to the growth of the euro. The COT report shows that long non-profit positions increased from the level of 228,757 to the level of 236,533, while short non-profit positions increased only from the level of 72,867 to the level of 73,067. Due to the sharp increase in long positions, the total non-commercial net position rose to 163,466 from 155,890 a week earlier.

Signals of indicators:

Moving averages

Trading is conducted in the area of 30 and 50 daily moving averages, which indicates the sideways nature of the market.

Note: The period and prices of the moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger Bands

A break of the upper limit of the indicator in the area of 1.2181 will lead to a new wave of growth of the euro.

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 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 the short and long positions of non-commercial traders.

*这里的市场分析是为了增加您对市场的了解,而不是给出交易的指示。

Miroslaw Bawulski,
分析专家
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