EUR/USD: plan for the European session on July 21. COT reports (analysis of yesterday's trade). EU budget and economic aid

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

The euro traded in a side channel yesterday amid the lack of news from the EU summit. After an unsuccessful attempt to gain a foothold at weekly highs, the pair fell to the morning support level, where the bulls were active again. In total, several entry points were formed. If you look at the 5-minute chart, you will see how the bears returned the pair to the 1.1453 level closer to the afternoon, which I paid attention to in my forecast, forming a signal to sell the euro there, which caused EUR/USD to rapidly fall to the low of 1.1412. There, the formation of a false breakout was a signal to open long positions, which in the end threw the euro to the resistance of 1.1453, where trading ended. Today, there is news that the EU budget and economic assistance plan were approved at the EU summit, but this did not cause the euro to grow, but on the contrary, put pressure on it. Most likely, the rapid growth did not occur due to the fact that many expected this to be the end of the meeting. You also need to analyze the details. Meanwhile, the Commitment of Traders (COT) report for July 14 recorded an increase in long positions and a very small rise in short ones, which indicates a gradual increase in demand for risky assets. There are more and more people willing to buy euros in the current conditions and at high prices,which may lead to further growth in the medium term. The report shows an increase in short non-commercial positions from the level of 881,562 to the level of 83,340, while long non-commercial positions jumped from the level of 185,159 to the level of 194,252. As a result, the positive non-commercial net position increased to 110,912 against 103,597, which indicates an increase in interest in purchasing risky assets at current prices. A positive conclusion of the EU summit will support the euro in the long term, which will certainly lead to an increase in long positions. As for the intraday strategy, today everything will depend on the market's reaction to the results of the summit, since there is no important fundamental data that will be released today. Bulls need a breakout and consolidation above the resistance of 1.1466, which will be a signal to open long positions while expecting the upward trend to continue to the high of 1.1514 and 1.1539, where I recommend taking profits. If the pressure on the euro persists in the first half of the day, it is best to postpone purchases until a false breakout forms in the area of 1.1412. Larger buyers will protect the low of 1.1371, as the market's further direction depends on it.

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

Sellers of the euro aim to protect the 1.1466 resistance, and so far they are doing quite well. Forming a false breakout there will be a signal to open new short positions in the hope of breaking the upward trend, which will quickly push the pair to support 1.1412, which acts as the middle of the channel. Much will depend on traders' reaction towards news from the EU summit. Consolidating below the level of 1.1412 forms an additional signal to sell EUR/USD, but the long-term goal is to break the low of 1.1371, which will lead to a complete break in the bullish market and increase pressure on the pair, opening a direct road to the lows of 1.1307 and 1.1257, where I recommend taking profits. If the bulls are stronger and active sales of 1.1466 resistance are seen, it is best to defer short positions to update the high of 1.1514 or sell EUR/USD immediately on a rebound from the larger resistance of 1.1569, based on a correction of 25-30 points within the day.

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Indicator signals:

Moving averages

Trade is conducted in the area of 30 and 50 moving averages, which indicates market uncertainty with the further direction, as there was no sharp growth following the good news from the EU summit.

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

Breaking the lower border of the indicator in the area of 1.1415 will increase pressure on the euro. Breaking the upper limit at 1.1466 will lead to a new wave of euro growth.

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) Fast EMA period 12. Slow EMA period to 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-commercial 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.
  • Short non-commercial 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.
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