EUR/USD: plan for the European session on August 4. COT reports (analysis of yesterday's trade). Euro buyers do not want

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

Both sellers and buyers of the European currency achieved their goals yesterday, and in general, the trading day brought a fairly good profit, as all the signals worked in a positive way. In my forecast for the second half of the day, I analyzed the deal at the 1.1777 level that formed in the European session. If we look at the 5-minute chart, we will see that approximately the same situation and a false breakout formed in the support area of 1.1704, from where I advised opening long positions, which caused the pair to return to 1.1777, for which a fierce fight will again unfold today. In this regard, the technical picture has not changed in any way. Special attention is drawn to data on holders of long and short positions in the futures markets.

The Commitment of Traders (COT) report for July 28 recorded a sharp increase in long positions and only a small increase in short ones, which tells us about the continued interest of investors in risky assets amid confusion that is happening in the US due to the coronavirus and the presidential election. The report shows an increase in long non-commercial positions from 204,185 to 242,127, while short non-commercial positions have grown only from 79,138 to 84,568. As a result, the positive non-commercial net position sharply jumped to 157,559, up from 125,047 a week earlier, indicating increased interest in buying risky assets even at current high prices. As for today's intraday strategy, the bulls' continue to focus on the 1.1777 area. Most likely, they will still be able to repel it in the first half of the day, which will form a signal to buy the euro, since important fundamental data will not be released today, except for data on producer prices in the eurozone. Active growth of the indicator will allow the bulls to get beyond 1.1777, which will open a direct road to the resistance of 1.1840, where I recommend taking profits. The long-term goal is still a weekly high of 1.1906. In case EUR/USD repeatedly falls, I recommend considering purchases only after forming a false breakout in the support area of 1.1704, as it was yesterday, or opening long positions immediately on a rebound from the low of 1.1648, based on a correction of 25-30 points within the day.

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

The bears will defend the resistance of 1.1777, but I don't want to bet much on it the second time. A false breakout forming in this range after the release of data on producer prices in the eurozone will be a signal to sell the euro. The goal of bears in this scenario will be to support 1.1704, where I recommend taking profits. A further area will be the low of 1.1648, but we will be able to reach it only in the event of a breakout and consolidation below the support of 1.1704. If the pair shows growth in the first half of the day, it is possible to open short positions on a rebound from the resistance of 1.1840, since in my opinion, there the bears will try to form the upper border of a new descending channel. If there is no activity in this range, it is best to sell EUR/USD only for a rebound from last week's high in the area of 1.1906, based on a correction of 25-30 points within the day.

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Indicator signals:

Moving averages

Trading is carried out just below the 30 and 50 moving averages, which indicates a downward correction forming in the short term.

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

The breakout of the upper border of the indicator in the area of 1.1777 will return new buyers of the euro to the market. In case the pair falls, support will be provided by the lower border of the indicator in the area of 1.1705.

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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