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EUR/USD: plan for the European session on December 23. COT reports. Euro breaks above 13th figure and aims for December highs


Relevance up to 06:00 2021-12-24 UTC+00

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

Several good signals to enter the market were formed yesterday. Let’s take a look at the 5 minute chart and understand the entry points. In my morning forecast, I drew attention to the 1.1285 level and advised you to make decisions on entering the market. Lack of fundamental statistics allowed the bulls to break above 1.1285 without any problems and aim for resistance at 1.1301, which has kept the pair in the channel this whole week. Unfortunately, I did not wait for the reverse test from top to bottom at the level of 1.1285, so the decision to buy EUR/USD was not made. In the afternoon, the bulls achieved a breakthrough and settled above 1.1303, and several reverse tests of this level from top to bottom led to forming a signal to open long positions with an exit at 1.1332. This allowed us to take about 30 points of profit from the market. A false breakout at 1.3332 at the end of the day gave a sell signal, but after a 12 points move down, the pressure on the euro eased.

Today there are no important statistics on the euro area and most likely the bulls’ advantage will remain. However, good reasons are needed to break through the December highs. A fairly large series of fundamental statistics will be released in the afternoon, if the bulls manage to maintain control over the support at 1.1324 by this time, the chances of continued growth in EUR/USD will increase many times. At the moment, bulls need to make efforts to protect 1.1324, and forming a false breakout will be a signal to buy the euro, counting on a recovery to the December high of 1.1358, above which there is a fairly large number of bears’ stop orders. A breakthrough of this range will also be an important task, and a reverse test from top to bottom will open the opportunity for growth to the area of new levels: 1.1381 and 1.1415, where I recommend taking profits. The 1.1442 level is a more distant target. If the pair declines during the European session and the bulls are not active at 1.1324, it is best to postpone long positions until the larger support at 1.1294, where the moving averages, playing on the side of the bulls, pass. I also advise you to open long positions there when a false breakout is formed. The bulls’ last hope to keep the pair in the upward correction channel will be the 1.1265 low, from which one can open long positions immediately on a rebound, counting on an upward correction of 20-25 points within the day.

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

The bears lost the battle for the 13th figure and now their last hope is this month’s high. The main task for the first half of the day is to protect the resistance at 1.1358. Considering that there are no important statistics today, it is quite possible that the bears will be able to do this. However, all the emphasis will shift to fundamental statistics on the American economy. Forming a false breakout at 1.1358 forms the first entry point for short positions, counting on maintaining pressure on the pair and falling to the 1.1324 area, for which a very active struggle will also unfold. A breakthrough and a test from the bottom up of this range will lead to another signal to open short positions with the prospect of pulling down the pair to the large support level of 1.1265, from which everything started yesterday. Only a breakthrough of this level will destroy a number of bulls’ stop orders and cause a larger fall in EUR/USD with renewed lows: 1.1246 and 1.1224, where I recommend taking profits. If the euro grows and the bears are not active at 1.1358, it is best not to rush to sell. The optimal scenario will be short positions when a false breakout is formed in the 1.1381 area. It is possible to sell EUR/USD immediately on a rebound from the high of 1.1415, or even higher – in the 1.1442 region, counting on a downward correction of 15-20 points.

I recommend for review:

The Commitment of Traders (COT) report for December 14 revealed that both short and long positions decreased, but the latter decreased slightly more, which led to an increase in the negative delta value. However, it should be noted that this data does not include the results of the meeting of the Federal Reserve and the European Central Bank. But if you look at the overall picture as a whole, trading in the horizontal channel is still preserved and even the meetings of the central banks did not make it possible to decide the pair’s succeeding direction. Buyers of risky assets, and now we are talking about the euro, are in no hurry to build up long positions even after the ECB announced that it plans to fully complete its emergency bond purchase program as early as next March – this indicates a change in the bank’s policy towards tightening it. On the other hand, the Fed is already planning to raise interest rates by this time, which makes the US dollar more attractive. However, the uncertainty with the new strain of the coronavirus Omicron continues to scare off market participants from active actions: no one wants to buy an overbought dollar, but the cheap euro is not yet a very attractive instrument either. The COT report indicated that long non-commercial positions fell from 194,869 to 189,530, while short non-commercial positions fell from 203,168 to 201,409. This suggests that traders are taking a wait-and-see attitude amid all the uncertainty. with the global economy. At the end of the week, the total non-commercial net position increased its negative value from -8 299 to 11 879. The weekly closing price, due to the horizontal channel, did not change at all – 1.1283 against 1.1283 a week earlier.

Indicator signals:

Trading is carried out above the 30 and 50 daily moving averages, which indicates the bulls’ attempt to continue the euro’s growth.

Moving averages

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

In case of a decline, support will be provided by the lower border of the indicator in the area of 1.1294. A breakthrough of the upper border of the indicator in the 1.1355 area will lead to a new will 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) 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.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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Elliott wave analysis of EUR/JPY for December 23, 2021

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