To open long positions on EURUSD, you need:
Given the low volatility and trading volume due to the weekend in the US, buyers of the European currency have not been able to reach the nearest resistance of 1.1234. The released data on German GDP growth rates in the 3rd quarter completely returned pressure on the pair, which began to gradually decline to the area of weekly lows, without updating the level of 1.1234. Let's hope that this will happen in the afternoon and we will get at least one signal to enter the market. However, during the American session, volatility may be even lower. From a technical point of view, nothing has changed, and it is unlikely to change.
In the second half of the day, bulls need to be vigilant and protect the nearest support of 1.1188. Only the formation of a false breakdown there will lead to the formation of the first entry point into the market against the downward trend observed this week. The main goal will be to return to the resistance of 1.1234, which was formed following the results of yesterday and where the moving averages are, limiting the upward potential of the pair. Breaking through this area will be an equally important task for the bulls. A top-down test of 1.1234 will give an excellent entry point into the market with the aim of euro growth in the area of 1.1273 and 1.1317. A more distant goal will be a maximum of 1.1359, where I recommend fixing the profits. In the scenario of a decline in EUR/USD to 1.1188, it is best not to rush with purchases. I advise you to wait for the next fall of the pair and the formation of a false breakdown at the new low of 1.1155. You can open long positions on EUR/USD immediately for a rebound from 1.1118, or even lower - from 1.1081, counting on a correction of 15-20 points within a day.
To open short positions on EURUSD, you need:
The most optimal scenario for opening short positions will be the formation of a false breakdown in the resistance area of 1.1234, which we missed quite a bit today, and where the moving averages limit the upward potential of the pair pass. With this option, the bears will return to the market, and their immediate goal will be a breakthrough and consolidation below the level of 1.1188, which they failed to do yesterday even against the background of strong fundamental statistics for the United States. The reverse test of 1.1188 from the bottom up will lead to the formation of a sell signal for the euro with the prospect of a decline in the area of 1.1155. A more distant goal will be the support of 1.1118, where I recommend fixing the profits. However, do not forget that today is Thanksgiving Day in the United States and the exchanges will be closed, which will limit volatility and affect trading volume. In the case of euro growth and lack of bear activity at 1.1234, it is better to wait with sales. The optimal scenario will be short positions after the formation of a false breakdown in the area of 1.1273. It is possible to sell EUR/USD immediately on a rebound from the highs: 1.1317 and 1.1359 with the aim of a downward correction of 15-20 points.
The COT report (Commitment of Traders) for November 16 recorded an increase in both short and long positions. However, there were more of the first ones, which led to the return of a negative delta. And although it continues to balance in the same range near the zero mark for quite a long time, it does not help euro buyers in any way. The risk of another surge in the spread of the coronavirus and the lockdown of the EU countries led to a return of pressure on the European currency, which has not yet managed to recover from the preservation of an ultra-soft monetary policy by the European Central Bank, even against the background of inflationary growth. Judging by what is happening, the ECB leaders have taken a fairly correct position. Austria has already returned to quarantine restrictions and strict isolation measures, and the German authorities are thinking about it – a very strong signal for further weakening of the euro's position against the dollar. Meanwhile, in the US, the fact of high inflationary pressure continues to support the US dollar. Many investors are counting on an earlier increase in interest rates by the Federal Reserve next year and are already playing the market in this direction. The latest November COT report indicated that long non-profit positions rose from the level of 192,544 to the level of 198,181, while short non-profit positions also jumped from the level of 188,771 to the level of 202,007. At the end of the week, the total non-commercial net position regained its negative value and amounted to -3,826 against 3,773. The weekly closing price decreased significantly, to the level of 1.1367 against 1.1587.
Signals of indicators:
Trading is below 30 and 50 daily moving averages, which indicates a possible decline in the euro in the afternoon.
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.
Volatility has decreased significantly, which does not give signals to enter the market.
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.