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EUR/USD: plan for the European session on December 28. COT reports. Euro remains in the channel with the prospect of a breakthrough


Relevance up to 04:00 2021-12-29 UTC+00

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

A fairly large number of profitable signals were formed yesterday. Let’s take a look at the 5 minute chart and understand the entry points. In my morning forecast, I paid attention to the 1.1331 level and advised you to make decisions based on it. The euro slightly slipped amid the lack of fundamental statistics and new bulls who regret opening long positions at current highs. An unsuccessful attempt to rise above 1.1331 and the formation of a false breakout there resulted in creating a good sell signal. As a result, the euro fell by 25 points. Towards the middle of the day, the bears achieved a breakthrough and consolidation below 1.1312, having tested it from the bottom up – however, this did not lead to a new short position. In the afternoon, the technical picture changed. I advised buying the euro when a false breakout was forming in the 1.1305 area, which happened. As a result, the growth amounted to about 30 points.

Most likely, trading will remain within the horizontal channel in today’s European session, as the activity of traders also promises to be at a fairly low level due to Boxing Day in many countries. The absence of important fundamental reports for the eurozone should affect the market volatility. Larger movements are expected only during the US session, when a number of reports on the US economy are published. It is best to trade within the wider 1.1305-1.1333 horizontal channel, formed at the end of yesterday. A big bull is clearly visible in the market at the bottom of the 13th figure, where an excellent buy signal was formed yesterday. I analyzed it above. Therefore, the formation of a false breakout at the 1.1305 level in today’s European session will be a signal to buy the euro, expecting a recovery to the resistance at 1.1333, just below which there are moving averages playing on the bears’ side. A breakthrough of this range will be no less important task, and a reverse test from top to bottom will open the opportunity for growth to the area of new levels: 1.1358 and 1.1381, where I recommend taking profits. The 1.1415 level is a more distant target. If the pair declines during the European session and the bulls are not active at 1.1305, it is best to postpone long positions until the larger support at 1.1291. This level is strategically significant for bulls, so one can count on the pair’s active growth from this range. However, I 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:

Yesterday, the bears did their best to move below the bottom of the 13th figure, but once again they were out of luck. If the pair grows today during the European session, the bears should try to do everything possible to protect the resistance at 1.1333. Considering that there are no important statistics today, it is quite possible that it will be possible to defend this level once again, which will keep trading within the horizontal channel. Low volume in the morning will contain volatility. Only the formation of a false breakout at 1.1333 creates the first entry point for short positions while expecting a return of pressure on the pair and a decline to the 1.1305 area. A more active struggle will unfold for this level. A breakdown and a test from below upward of this range will provide another signal to open short positions with the prospect of pulling down the pair to a large support level of 1.1291. Only a breakthrough of this level will remove a number of bulls’ stop orders and cause a larger fall in EUR/USD with renewed lows: 1.1265 and 1.1246, where I recommend taking profits. If the euro grows and the bears are not active at 1.1333, it is best not to rush to sell. The optimal scenario will be short positions when a false breakout is formed around 1.1358. It is possible to sell EUR/USD immediately on a rebound from the 1.1381 high, or even higher – in the 1.1415 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 in the area of 30 and 50 day moving averages, which indicates the sideways nature of the market after the Christmas holidays. …

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 at 1.1305. In case of growth, the upper border of the indicator in the area of 1.1330 will act as a resistance.

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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