EUR/USD: plan for the European session on August 18. COT reports (analyzing yesterday's trades). Bulls break above 1.1865

To open long positions on EURUSD, you need:

Even at a second attempt, buyers of the European currency achieved their goal and managed to break through above the large resistance level of 1.1865 yesterday, from which you could observe active sales in the first half of the day. If you look at the hourly chart, you will see how a strong bullish momentum caused the pair to settle and stay above the 1.1865 level, forming a good entry point into long positions, which was implemented today in the Asian session.

Reports from the futures market also tell us that buyers continue to dominate. The Commitment of Traders (COT) reports for August 11 continued to report the growth of long positions and the reduction of short ones, which tells us about the continued interest of investors in risky assets, even at such high prices, as many bet on a further weakening of the US dollar before the US elections and a more difficult situation with the spread of the coronavirus epidemic. Problems are also being added due to disagreements in the US Congress on the further approval of financial assistance to the unemployed, as well as the aggravation of US trade relations with China and the EU. The report shows an increase in long non-commercial positions from the level of 262,109 to the level of 266,078, while short non-commercial positions decreased from 81,461 to 66,327. As a result, the positive non-commercial net position sharply jumped to 199,751, up from 180,648 a week earlier, indicating an increase in interest in buying risky assets.

As for the further movement of the pair, much will depend on how buyers will show themselves in the resistance area of 1.1912, which is a gradual movement. A breakout and consolidation above this level, and unfortunately there is nothing to do it on, since important fundamental data will not be released today, will result in EUR/USD growing further towards a high of 1.1987. A more distant goal will be the 1.2020 level, where I recommend taking profits. If the pressure on the euro returns in the European session, then by analogy with yesterday, you can watch purchases immediately on the rebound from the major support of 1.1865, where the moving averages are. You can also open long positions from the low of 1.1830 in anticipation of a correction of 30-40 points within the day.

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

As long as trade is developing in this way, sellers of the euro are unlikely to act rashly. Most likely, we can only observe the bears' first activity of the day after updating the 1.1912 level. But a false breakout forming there will be a signal to open short positions in the hope of pulling down the pair to a larger support of 1.1865, where the moving averages that play on the side of buyers also pass. An equally important task is to consolidate below this range, which will raise the pressure on the euro and lead to an update of the low of 1.1830, where I recommend taking profits. However, testing this level will not even create a real threat to the bull market, which we can now observe. This requires returning to the support of 1.1784. In case bears are not active in the 1.1912 area, it is best to postpone short positions until the highs of 1.1987 and 1.2020 have been updated, from where you can sell EUR/USD immediately on the rebound in anticipation of a correction of 30-40 points within the day.

Indicator signals:

Moving averages

Trading is conducted above 30 and 50 moving averages, which indicates a continuation of the bullish trend.

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

In case the pair falls, support will be provided by the lower border of the indicator in the 1.1845 area, from where you can buy the euro immediately on a rebound. A breakout of the upper border of the indicator around 1.1890 will lead to a larger 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) 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.
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