18.01.202113:31 Forex Analysis & Reviews: EUR/USD: plan for the American session on January 18 (analysis of morning deals)

To open long positions on EURUSD, you need:

The lack of activity at the level of 1.2064 proves the fact that there are no major buyers of the European currency and the downward movement will continue in the near future. In the US, today is Martin Luther King Day, so volatility in the afternoon promises to be quite low, and trading will remain around the range of 1.2064.

Exchange Rates 18.01.2021 analysis

From a technical point of view, nothing has changed. The task of buyers is to protect the support level of 1.2064, however, I do not recommend rushing to open long positions from it. Only a normal dip under this range by 20-25 points and a return form a buy signal. You also need to wait for the top-down test at this level to make sure that the big players are present. If there is no bull activity further, it is best to postpone long positions until the test of the next monthly lows in the area of 1.2026 and 1.1986, from where you can buy EUR/USD immediately for a rebound in the expectation of a correction of 20-25 points within the day. An equally important task for the bulls will be to return to the control of the level of 1.2102, where the moving averages play on the side of the sellers of the euro. A breakout and consolidation above 1.2102 with a test of this area from top to bottom forms a convenient entry point into long positions in the expectation of a return and update of the resistance of 1.2142, where I recommend fixing the profits.

To open short positions on EURUSD, you need to:

Sellers of the euro will focus on a breakout and consolidation below the support of 1.2064. However, given that there is no active action at this level, it was not possible to wait for the formation of a signal to open short positions in the first half of the day. The Italian data was ignored by the market. Only a confident breakdown of this level with a return and a test of it from the bottom up will form a new signal to open short positions and give a direct path to the minimum of 1.2026, where I recommend fixing the profits. A more distant target will be the area of 1.1986, but such an active fall is unlikely to be fashionable at the beginning of the week, especially if there is low volatility due to the weekend in the United States in honor of Martin Luther King Day. An equally important task for the bears will be to protect the resistance of 1.2102. In the case of EUR/USD recovery, the formation of a false breakout will form a signal to open short positions in the continuation of the downward trend. If there is no activity on the part of sellers after the resistance test of 1.2102, it is best to abandon sales. In this case, you can look at short positions only after updating the maximum of 1.2142 or sell EUR/USD immediately for a rebound from the level of 1.2179, based on a downward correction of 20-30 points within the day.

Exchange Rates 18.01.2021 analysis

Let me remind you that the COT report (Commitment of Traders) for January 5 recorded the growth of short positions and the growth of long positions. Buyers of risky assets continue to believe in a bullish trend even despite the decline of the European currency at the beginning of this year, which will allow new major players to enter the market. News that vaccination against the first strain of coronavirus continues in Europe will also support euro buyers. Pressure on the euro will be exerted by isolation measures and the current quarantine in many European countries. Thus, long non-commercial positions rose from 222,443 to 224,832, while short non-commercial positions jumped to 81,841 from 78,541. Due to the larger increase in short positions, the total non-commercial net position decreased from 143. 902 to 142,991 weeks earlier. The insignificant change in the delta at the beginning of the year hardly indicates a change in the tactics of buyers of the European currency, who expect the euro to resume growth after the lifting of quarantine measures in the EU countries.

Signals of indicators:

Moving averages

Trading is below 30 and 50 daily moving averages, which indicates a further decline in the euro.

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.

Bollinger Bands

A break of the lower limit of the indicator in the area of 1.2060 will lead to a new wave of decline in the euro. In the case of euro growth, the upper limit of the indicator will act as a resistance in the area of 1.2095.

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.

*La presente analisi del mercato ha un carattere esclusivamente informativo e non rappresenta una guida per l`effettuazione di una transazione.

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Analista del: Miroslaw Bawulski
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