14.01.202113:15 Forex Analysis & Reviews: EUR/USD: plan for the American session on January 14 (analysis of morning deals)

To open long positions on EURUSD, you need to:

In the morning forecast, I made a detailed emphasis on the level of 1.2138 and recommended that decisions be made from it when the pair decreases to this range. Let's look at the 5-minute chart and figure out what happened. At the first test of the level of 1.2138, the bulls coped with the task and did not let the pair below this range. The second false breakout was an excellent signal for entering long positions, the main goal of which is now to return to the upper border of the side channel.

As long as trading is above 1.2138, the market will be on the side of euro buyers. From a technical point of view, nothing has changed. Now the bulls need to think about how to regain the level of 1.2179. The focus will likely be placed on the speech of Federal Reserve Chairman Jerome Powell, as well as weekly data on the US labor market. Going beyond the forecast may put pressure on the dollar. Only a confident breakdown and test of the level of 1.2179 from top to bottom will lead to the formation of a signal to open new long positions to grow EUR/USD to the resistance area of 1.2224. The longer-term target of buyers remains a maximum of 1.2281, where I recommend fixing the profits. If the bears again return the pair to the weekly support level of 1.2138, then I recommend not to rush to buy. The optimal scenario is to wait for the formation of a false breakout, similar to the morning purchase, which I analyzed above. I recommend opening long positions immediately for a rebound only from the new weekly low in the area of 1.2083 with the aim of an upward correction of 20-30 points within the day.

To open short positions on EURUSD, you need to:

Sellers of the euro failed to meet the target for the first half of the day and failed to break below the support of 1.2138. As I noted, much will depend on the Fed Chairman's speech, as only his statements can lead to a breakdown of the area of 1.2138. A breakout and consolidation below this level, with a test of it from the bottom up, form another good signal to open short positions in the continuation of the bear market, which will clear the way to the lows of 1.2083 and 1.2042, where I recommend fixing the profits. If in the second half of the day the pair returns to the level of 1.2179, then I recommend opening short positions from there only when a false breakout is formed. In case of lack of activity on the part of the bears, it is best to abandon sales before the resistance update of 1.2224 or sell EUR/USD immediately to rebound from the maximum of 1.2881 in the expectation of a downward correction of 20-30 points within the day.

Let me remind you that the COT report (Commitment of Traders) for January 5 recorded the growth of short positions and the growth of long positions. Buyers of risky assets continue to believe in a bullish trend even despite the decline of the European currency at the beginning of this year, which will allow new major players to enter the market. News that vaccination against the first strain of coronavirus continues in Europe will also support euro buyers. Pressure on the euro will be exerted by isolation measures and the current quarantine in many European countries. Thus, long non-commercial positions rose from 222,443 to 224,832, while short non-commercial positions jumped to 81,841 from 78,541. Due to the larger growth of short positions, the total non-commercial net position decreased from 143,902 to 142,991 weeks earlier. The insignificant change in the delta at the beginning of the year hardly indicates a change in the tactics of buyers of the European currency, who expect the euro to resume growth after the lifting of quarantine measures in the EU countries.

Signals of indicators:

Moving averages

Trading is conducted around 30 and 50 daily moving averages, which indicates some market uncertainty.

Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger Bands

A break of the lower limit of the indicator in the area of 1. 2138 will lead to a new wave of decline in the euro. A break of the upper limit of the indicator in the area of 1.2179 will lead to a new wave of growth of the euro.

Description of indicators

• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
• MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-profit 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 the short and long positions of non-commercial traders.