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

After missing the signal to sell the euro last Friday, and as you may remember, we were literally a couple of points short before it appeared, we could have looked for short positions in the afternoon. Let's figure it out. If you look at the 5-minute chart, you can see how bulls have been defending support at 1.1631 almost all day, but it was impossible to buy from there. But the situation with sell positions was much better, although it was not possible to wait for a major downward movement in the pair. Going beyond and settling below 1.1631 in the afternoon, and then its reverse test from the bottom up, resulted in a good short entry point. But the bears were only able to update the weekly low, after which the pair returned back to the 1.1631 level.

Before talking about today's prospects for the pair's movement, let's look at the situation on the futures market, which changed the direction for the euro buyers, but did not seriously affect the alignment of forces in the market. The Commitment of Traders (COT) reports for September 22 showed that both long and short positions increased, but there were more of the first ones than the latter, which led to an increase in the delta. Apparently, buyers are attracted to such a low euro rate for the first time in three months, even despite the risk of a second wave of coronavirus infection across Europe. Thus, long non-commercial positions increased from 230,695 to 247,049, while short non-commercial positions only increased from 52,199 to the level of 56,227. The total non-commercial net position also increased over the reporting week to 190,822, against 178,576 a week earlier, which indicates bullish market sentiment in the medium term. The more the euro falls against the US dollar, the more attractive it will be for new investors.

As for the current situation on the market, bulls urgently need to regain the resistance level of 1.1640, slightly above which are the moving averages playing on the side of the euro sellers. Settling above this range will stop the current downward trend in the pair, which will generate a signal to buy the euro, which may lead to updating last Friday's high at 1.1688, where I recommend taking profits. If EUR/USD continues to fall, and today, we don't expect anything apart from the speech of the European Central Bank President Christine Lagarde, then I recommend considering new long positions only after the low of 1.1585 has been updated, or buy the euro immediately on a rebound from the support of 1.1541, counting on a correction in 20-30 points within a day. But remember that trading against the trend and looking for a low for a rebound carries high risks.

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

Bears need a false breakout in the 1.1640 resistance area, which they defended last Friday. In this scenario, along with a rebound from the moving averages, we can expect renewed pressure on the euro in order to update the next monthly lows around 1.1585, which is where I recommend taking profit. The 1.1541 area will be a distant goal. If the market decides to test the bears' stop orders for strength after Lagarde's speech, and it returns to the 1.1640 level, then it is better not to rush to sell. A more optimal scenario would be short positions immediately on a rebound from the large resistance at 1.1688, from where sell positions were placed last Friday. In case bears are not active at this level, you can safely sell on a rebound from the resistance of 1.1734, counting on a correction of 20-30 points within the day.

Indicator signals:

Moving averages

Trading is carried out below 30 and 50 moving averages, which implies that the euro will fall further.

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

A breakout of the lower border of the indicator around 1.1610 will increase pressure on the euro. A breakout of the upper border of the indicator in the 1.1645 area will lead to a sharper rise in the euro.

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.