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29.07.202108:43 Ανάλυση και κριτικές Forex: EUR/USD: plan for the European session on July 29. COT reports. Euro continued to rise as the Fed did not say anything new

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

The European currency continued to rise against the US dollar, as at the end of the Federal Reserve meeting, we did not learn anything new that could affect the balance of power. Let's take a look at the 5 minute chart and break down the trades. In the first half of the day, after several unsuccessful attempts to settle below 1.1808, the bulls formed a false breakout at this level, which led to a signal to enter long positions. As a result, there was an increase by 20 points to the next resistance level of 1.1830, and at this the initiative dried up. The US session was more productive. Protecting 1.1804 did not lead to an increase in the euro, and after the breakdown and renewal of this level from the bottom up, a signal was formed to open short positions, after which the pair immediately fell to the support area of 1.1787. The bulls were more active there and managed to form a false breakout, which led to a sharp rise in the euro by 30 points before the Fed meeting. After the the central bank's decision was announced, the bears' attempt to push through 1.1787 failed, and after the bulls regained control over this level, another buy signal was formed, which brought more than 60 points of profit.

Exchange Rates 29.07.2021 analysis

Quite interesting data on the unemployment rate in Germany and the indicator of consumer confidence in the eurozone are set to be published this morning. Only very weak indicators in these two directions will harm the upward trend of the euro, which was formed at the end of yesterday. Bulls will then focus on surpassing the 1.1864 level, which is this month's high. There are a number of stop orders of large players above this area, therefore, their removal with a reverse test of this area from top to bottom will form a signal to open long positions in continuation of the upward trend, counting on the growth to the bottom of the 19th figure. The 1.1937 area will be the next target, where I recommend taking profits. In case EUR/USD falls during the European session and we receive disappointing reports on Germany and the eurozone, then I recommend not to rush into long positions. Forming a false breakout in the 1.1843 area will result in creating a new entry point into long positions. If the bulls are not active at this level, I advise you to wait for the renewal of the larger low at 1.1824, where the moving averages also pass, playing on the side of the euro bulls. You can also buy the pair immediately on a rebound from the level of 1.1799, counting on an upward correction of 15-20 points within the day.

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

The bears have lost all their advantage after yesterday's Fed meeting and are now one step away from completely missing the market. Going beyond the resistance at 1.1864 will lead to a reversal of the downward trend observed since the beginning of this month. Much will depend on the data on the German labor market and the indicator of consumer confidence in the eurozone. If traders are disappointed with the report, the pressure on the euro will return. During today's European session, bears need to think carefully about protecting the resistance at 1.1864. The formation of a false breakout there and a weaker than expected report on Germany - all this creates a signal to open short positions in hopes of keeping the pair in a wide horizontal channel. An important target will be the support at 1.1843, which formed at the end of yesterday after a large increase in the euro. Consolidating below this range and testing it from the bottom up will form a good signal to open short positions, which will push EUR/USD to the larger low of 1.1824 where the moving averages pass. The 1.1799 area will be the next target, where I recommend taking profits. If EUR/USD grows during the European session and the bulls are not active at 1.1864, it is best to postpone selling until the test of the larger resistance at 1.1882, but short positions can be opened there only after a false breakout is formed. I recommend selling the pair immediately on a rebound counting on a downward correction of 15-20 points only from a high like 1.1904.

Exchange Rates 29.07.2021 analysis

I recommend for review:

The Commitment of Traders (COT) report for July 20 continued to observe the market bias towards sellers of risky assets. Long positions contracted and short positions rose, which caused overall positive net position to decrease. Last week's European Central Bank meeting dampened sentiment among euro bulls, as it became clear to everyone that the central bank would not rush to tighten monetary policy and would maintain an emergency bond buying program for as long as possible to spur inflationary growth to reach its new target of 2.0%. The situation is the opposite in America. US inflation has long gone beyond the target value, and many representatives of the Federal Reserve point to the need to abandon super-soft stimulus measures in the near future, which plays on the side of the dollar. And no matter how the US central bank tries to convince investors that this is just a temporary phenomenon, the market continues to abandon risky assets in favor of safe-haven assets, which is the US dollar. This week we will receive the FOMC decision on the main interest rate, which could strengthen the position of the US dollar if management seriously considers the issue of cutting the bond purchase program in the fall of this year. But the lower the euro falls, the higher the demand for it will be in the medium term, since the appeal of risky assets is not going anywhere. The COT report indicated that long non-commercial positions fell from 212,851 to 208,669, while short non-commercial positions rose from 153,138 to 162,847 US GDP for the second quarter of this year, where growth is expected at once by 8.4%. It could also provide a powerful bullish momentum for the US dollar. The total non-commercial net position decreased from 59,713 to 45,822. The weekly closing price declined from 1.1862 to 1.1791.

Indicator signals:

Trading is carried out above 30 and 50 moving averages, which indicates the continuation of the upward correction of the pair.

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

Surpassing the upper border of the indicator in the area of 1.1872 will lead to a new wave of euro growth. In the event of a decline, support will be provided by the lower border of the indicator in the area of 1.1785.

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.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Miroslaw Bawulski,
Αναλυτικός εμπειρογνώμονας της InstaForex
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