EUR/USD: plan for the European session on December 9. COT reports. Market froze in anticipation of Brexit news and ECB meeting

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

In general, nothing interesting happened yesterday. The lack of important fundamental reports did not make it possible for large players to rock the market, which kept volatility low. If you look at the 5-minute chart, you will see how the bears tried to form a signal to sell the euro and they succeeded. However, this did not lead to a significant downward movement, but only made it necessary to reconsider the nearest support and resistance levels. Let's figure out what to do next.

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Buyers of the euro should do their best in going beyond yesterday's resistance at 1.2135. Testing this level from top to bottom after the breakout produces a good signal to open long positions in hopes to sustain the upward trend, which is currently present in the market. The main goal is to return to last week's highs in the 1.2177 area, which has already been tested for strength twice. The fact that the bulls failed to update this level yesterday threatens the upward trend. Therefore, testing 1.2177 for the third time will lead to its breakout and EUR/USD can rise to the highs of 1.2255 and 1.2339, where I recommend taking profit. If bulls are not active in the 1.2135 area, it is best not to rush into buying, since it will really depend on the final Brexit talks, which will be held in Brussels today between British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen. Forming a false breakout in the support area of 1.2099 will be a signal to open long positions. I recommend buying the pair immediately on a rebound from the 1.2046 level, counting on a correction of 20-25 points within the day. A larger support level is seen around 1.1986. Testing this low will revert the upward trend in the short term.

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

Pound sellers are currently focused on the 1.2135 level, which they need to protect. Forming a false breakout there in the first half of the day will be a signal to open short positions in order to continue the downward correction so it can reach the low of 1.2099, since it was not possible to break through the area below it yesterday. Getting the pair to settle below this range and testing it from the bottom up will be a good signal to sell EUR/USD to the area of a large low at 1.2046, and the bears' next target will be to close the day in the support area at 1.1986, which will seriously affect the upward trend. If EUR/USD rises above the resistance level of 1.2135, it is better not to rush to sell. In this scenario, you can only rely on short positions from the resistance of 1.2175, or sell EUR/USD from a new high of 1.2255, counting on a downward correction of 15-20 points within the day. Do not forget about placing stop orders since we expect high volatility and sharp movements today, which will help you avoid losses in case of an incorrect market entry.

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The Commitment of Traders (COT) report for December 1 showed an increase in long positions and a reduction in short positions. Buyers of risky assets believe that the bull market will continue and they also anticipate the euro's growth, after going beyond the psychological mark in the area of the 20th figure. Thus, long non-commercial positions rose from 206,354 to 207,302, while short non-commercial positions fell to 67,407 from 68,104. The total non-commercial net position rose to 139,894 from 138,250 a week earlier. Take note of the delta's growth after its 8-week decline, which indicates a clear advantage of buyers and a possible resumption of the medium-term upward trend for the euro. We can only talk about an even bigger recovery when European leaders have negotiated a new trade deal with Britain. However, we did not receive good news last week, and we have an EU summit ahead of us, which could put the final point in this story. News that restrictive measures will be lifted for the Christmas holidays can provide support to the euro, as well as the absence of major changes in the ECB's monetary policy.

Indicator signals:

Moving averages

Trading is carried out in the area of 30 and 50 moving averages, which indicates the sideways nature of the market ahead of important news on Brexit.

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

Volatility is low, which does not provide signals to enter the market.

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.
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