To open long positions on EURUSD, you need:
In my morning forecast, I paid attention to the level of 1.1683 and recommended making decisions based on it. Let's look at the 5-minute chart and talk about what happened. It is clearly seen how after the breakdown and the unsuccessful attempt of the bulls to regain control over the level of 1.1683, the pair returns to this level, which leads to the formation of a signal to sell the euro. However, it never came to a major sale. As a result, the most optimal scenario for this input was the exit to zero. For the second half of the day, the technical picture changed slightly, although the tactics remained the same. All the emphasis will be placed on the speeches of representatives of the US Federal Reserve System, as well as on the statements made by Jerome Powell and Treasury Secretary Janet Yellen. Also, do not forget about the speech of the president of the European Central Bank, Christine Lagarde, which may lead to a larger surge in volatility. Buyers of the euro, who managed to form new support of 1.1674 in the first half of the day and did not let the pair into a steep downward peak, will now need to try very hard to return the market under their control. Therefore, during the American session, it is so important to catch on to the resistance of 1.1702, in the area of which there are moving averages that play on the sellers' side. The breakout and the test of this level from top to bottom, together with Lagarde's statements that it is time to seriously think about curtailing the bond purchase program against the background of rapidly growing inflation, form a good entry point into long positions in order to restore the pair to the area of 1.1727, and then to the upper border of the side channel of 1.1749, where I recommend fixing the profits. A longer-range target will be a maximum of 1.1775. If the pressure on the euro returns in the second half of the day, and as we can see, there are no particularly willing to sell EUR/USD yet, even after updating the weekly lows, then the primary task of the bulls will be to protect the level of 1.1674. Only the next formation of a false breakdown will lead to the formation of a signal to open long positions based on an upward correction. In the scenario of the absence of bull activity at this level, I advise you to postpone purchases to new lows in the area of 1.1651 and 1.1631. It is possible to open long positions immediately for a rebound only at the new local support of 1.1605, counting on an upward correction of 15-20 points within the day.
To open short positions on EURUSD, you need:
Sellers are trying to keep the market under their control. However, so far, there are no willing to open short positions even after updating local lows, which casts doubt on the further bear market for the pair. Only a repeated test and a breakthrough of the 1.1674 level, which was formed following the results of yesterday, as well as its update from the bottom up, will form a new entry point into short positions in order to reduce EUR/USD to new intraday lows of 1.1651 and 1.1631, where I recommend fixing the profits. A more distant target will be the minimum of 1.1605. However, we will be able to get to it only if the Fed today seriously talks about a more active pace of curtailing soft monetary policy. If EUR/USD rises in the second half of the day after the speech of the chairmen of the Federal Reserve System, the bears will need a lot of effort to protect the resistance of 1.1702, which was formed following the results of the European session. Only the formation of a false breakout on it forms a good entry point into short positions. In the scenario of no sellers at the level of 1.1702, it is best to postpone sales until the test of a larger resistance of 1.1727. I advise you to open short positions immediately for a rebound based on a downward correction of 15-20 points only from the new maximum of 1.1749.
The COT report (Commitment of Traders) for September 21 recorded a sharp increase in short positions and only a slight increase in long ones, which is due to the lack of desire among traders to bet on strengthening risky assets in the early autumn of this year. The prospect of changes in the monetary policy of the Federal Reserve System in November this year keeps the demand for the US dollar, as many investors expect the start of a reduction in the bond purchase program from the central bank. The fact that inflation in the United States of America is almost out of the control of the Fed suggests possible more aggressive actions by the end of the year, which can seriously affect the mood of traders and investors. This week, there will be a fairly large number of speeches by both representatives of the Fed and Chairman Jerome Powell, which can shed light on how the central bank will act in this or that situation. Given that energy prices continue to fly up, which will necessarily affect the producer and consumer price index, specifics from the Federal Reserve System would certainly not hurt the markets. The demand for risky assets will remain limited due to the high probability of another wave of the spread of the coronavirus, and its new Delta strain. All this will force the European Central Bank to continue to adhere to a wait-and-see position and maintain a stimulating policy at current levels since there are no serious inflationary problems in the eurozone yet. The COT report indicates that long non-commercial positions increased quite a bit - from the level of 186,554 to the level of 189,406, while short non-commercial positions jumped quite seriously - from the level of 158,749 to the level of 177,311. At the end of the week, the total non-commercial net position fell from the level of 27,805 to the level of 12,095. The weekly closing price also fell to 1.1726 from 1.1809.
Signals of indicators:
Trading is conducted below 30 and 50 daily moving averages, which indicates an attempt by the bears to regain control of the market.
Note: The period and prices of 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.
A break of the upper limit of the indicator in the area of 1.1705 will lead to a larger wave of euro growth.
Description of indicators