EUR/USD: plan for the European session on August 14 (analyzing yesterday's trade). Several important reports on the eurozone

To open long positions on EURUSD, you need:

It was not possible to wait for adequate points to enter the market yesterday after updating resistance at 1.1843. Let's take a look at a 5-minute chart. Clearly, you can see that the bulls tried to gain a foothold in this range after the breakout of 1.1843, but the bears quickly returned the pair below this level. Afterwards, there was an attempt to arrange a downward movement following news that there has been an improvement in the situation of the US labor market, but even a miss was made here, and the 1.1843 level is being stitched again from the bottom up. All this led to a revision of the technical picture and new supports and resistances being formed. At the moment, the bulls need to protect the 1.1795 area. I recommend opening long positions from there only after forming a false breakout along with good eurozone data on GDP and the unemployment rate. Reports should at least be as good as economists' forecasts. In this case, you can count on EUR/USD returning to the resistance area of 1.1861, where I recommend taking profits. A high at 1.1900 will be the long-term goal. In case we do not see a rapid upward movement in the 1.1795 area, it is best to postpone long positions until a low of 1.1757 has been updated, or buy the euro immediately on the rebound from the support of 1.1714 in anticipation of a correction of 30-40 points within the day.

Let me remind you that the Commitment of Traders (COT) reports for August 4 recorded an increase in long positions and a reduction in short ones, which tells us that investors are still interested in risky assets, even at such high prices. Many are betting that the US dollar will weaken even more before the US election and a more difficult situation with the spread of the coronavirus epidemic. The report shows an increase in long non-commercial positions from the level of 242,127 to the level of 262,109, while short non-commercial positions decreased from 84,568 to 81,461. As a result, the positive non-commercial net position sharply jumped to 180,648, up from 157,559 a week earlier, indicating increased interest in buying risky assets even at current high prices.

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

Sellers will wait for more bad data on the eurozone economy and continue to pull down the pair under the 1.1795 level. Settling under this range will increase pressure on the euro, which will lead to a larger sell-off in the area of lows 1.1757 and 1.1714, where I recommend taking profits. However, we can reach these areas only if the US fundamental data turn out to be poor, which is set to be released in the afternoon. Disappointing data will further raise investor concerns and reduce demand for risky assets. In case EUR/USD grows in the first half of day, it is best to defer short positions to updates of a 1.1861 high or sell immediately for a rebound after testing the monthly level of 1.1912 based on the correction of 30-40 points.

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Indicator signals:

Moving averages

Trading is carried out in the area of 30 and 50 moving averages, which indicates market uncertainty.

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 D1 daily chart.

Bollinger Bands

A breakout of the lower border of the indicator around 1.1795 will lead to a larger decline in the euro. Growth will be limited by the upper level of the indicator around 1.1850.

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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