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20.01.202114:20 Analisis Forex & Kajian: EUR/USD: Trading plan for North American session for January 20, 2021 (morning deals analysis). Weak euro area inflation data helps bears to regain control of 1.2130

In order to open long positions on EUR/USD, you should:

In my morning review, I paid attention to the level of 1.2130. Now, let's take a look at the M5 chart and discuss the entry points. Thus, according to the chart, the euro dropped to the support area of 1.2130 where a breakout took place. Inflation in the eurozone revealed all the complexity of the situation as well as the likelihood of increased deflationary pressure. As a result, sellers managed to gain control of the 1.2130 level. This is an excellent short entry point. The target is seen at the low of 1.2089. The pair has already declined by 15 pips from the level of 1.2130.

Exchange Rates 20.01.2021 analysis

From now on, bulls will be focusing on 1.2089 where the price is heading at the moment. A false breakout at this level will give a buy signal. As a result, the pair may reverse and resume its upward movement. It is a very important point since bulls will try to build the lower border of the new ascending channel at this level. If there is no trading activity in the area of 1.2089, bulls will face serious problems, as the pair's return to the support of 1.2055 will only lead to a small upward correction of 20-25 pips. The return to 1.2055 will indicate the resumption of the bearish trend on EUR/USD. An equally important task for buyers will be to regain control of the 1.2130 level. In case the price consolidates and tests the level from above, it will be regarded as a signal to open long positions in order to return to the high of 1.2174, where I recommend taking profits. Another target is seen at 1.2220. Anyway, the price will probably start heading to this level only after Joe Biden makes his first statements as President.

In order to open short positions on EUR/USD you should:

Bears will try to keep control of the 1.2130 level. In the first half of the day, the entry signal was formed from this point. A breakout at the moving averages is likely to lead to a downward correction in the area of 1.2089. Both bears and bulls will try to establish control of this level. If bears' attempt turns out to be successful, the price will break out and consolidate below this level, providing an additional entry point for short positions. Consequently, the euro will probably plunge to the low of 1.2055. I recommend taking profit at this level. In case of a breakout in this range, the price will head to the lows of 1.2026 and 1.1986, where I recommend taking profit. Alternatively, if bulls regain control of the 1.2130 resistance, the best thing to do will be to refrain from selling the instrument. Short positions should be opened if there is a false breakout in the area of 1.2174. One can sell EUR/USD immediately on a rebound only from the high of 1.2220, taking into account a downward correction of 20-25 pips within the day.

Exchange Rates 20.01.2021 analysis

As for the Commitment of Traders (COT) report presented on January 12, the number of long positions increased, while the number of short positions decreased. Buyers of risky assets still believe in the continuation of the bullish trend especially after such a sharp decline in the euro earlier this year. Consequently, the number of large market players is increasing. The vaccine rollout against the first strain of coronavirus continues in Europe. A possible approval of the $1.9 trillion economic rescue package in the US is likely to lead to the weakening of the US dollar. The possibility of the lockdown extension in Europe in February this year serves as a limiting factor for the euro. Thus, long non-commercial positions increased to 228,757 from 224,832. Meanwhile, short non-commercial positions fell to 72,867 from 81,841. Due to a sharp drop in short positions, the total non-commercial net position rose to 155,890 from 143,902 a week earlier.

Exchange Rates 20.01.2021 analysis

Indicator signals:

Moving averages

Trading activity takes place in the area of 30 and 50 day moving averages, indicating that bears attempt to regain control of the market.

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

Bollinger Bands

A breakout in the area of 1.2110, the lower border of the indicator, will increase pressure on the euro.

Description of indicators

• Moving average determines the current trend by smoothing volatility and noise. Period = 50. Color - yellow.

• Moving average determines the current trend by smoothing volatility and noise. Period = 30. Color - green.

• Moving Average Convergence/Divergence indicator (MACD). Fast EMA, period = 12. Slow EMA, period = 26. SMA, period = 9.

• Bollinger Bands. Period = 20.

• Nonprofit traders are speculators 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.

• Non-commercial short positions represent the total short open position of non-commercial traders.

• The total non-commercial net position is the difference between short and long positions of non-commercial traders.

* Analisis pasaran yang disiarkan di sini adalah bertujuan untuk meningkatkan kesedaran anda, tetapi tidak untuk memberi arahan untuk membuat perdagangan.

Miroslaw Bawulski,
Pakar analisis
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