02.09.202009:17 Forex Analysis & Reviews: EUR/USD: plan for the European session on September 2. Unsuccessful test of the 20th figure ended with a euro sell-off. COT reports. We are waiting for the fight for 1.1887

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

Yesterday's data on inflation in the eurozone did not help the euro break above the 20th figure, and the call to the parties from the US Treasury Secretary for a new $1.5 trillion bailout package led to a downward correction. The only sell signal, which formed in the first half of the day and then confirmed at the US session, was fully reached. Let's look at the 5-minute chart. Here we see how more than three unsuccessful attempts to break above the resistance of 1.1994 each time has returned the pair to this level. The bulls' attempt to gain a foothold above 1.1994 only resulted in speculative players removing their stop orders, after which the market turned around. At the moment, the bulls need to protect the support of 1.1887, for which a very active fight will be conducted today. It is best to open long positions from there only when a false breakout has formed while also expecting the pair to return to the resistance of 1.1937. This may happen after the release of good fundamental data on retail sales in Germany and producer prices in the eurozone. However, an equally important task is for buyers to return to the resistance of 1.1937, just above which the moving averages are located, playing on the sellers' sides. Only this will lead to a new upward trend capable of updating the highs of 1.1994 and 1.2022, where I recommend taking profits. If there is no activity from the bulls near the support at 1.1887, it is better to postpone long positions to update the low of 1.1849 or buy EUR/USD immediately on a rebound from 1.1812 based on the correction of 20-30 points within the day.

Let me remind you that the Commitment of Traders (COT) reports for August 25 recorded an increase in long non-commercial positions from the level of 259,244 to the level of 262,061, while short non-commercial positions decreased from the level of 62,301 to the level of 50,309. Given that the closing of long positions has stopped, and after a short pause, traders began to actively buy euros on the futures market, we can expect the upward trend to continue in the first half of September.

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

Sellers slightly recovered after another unsuccessful attempt by the bulls to take the 20-th figure. Now it is necessary to add pressure on the market and settle below the support of 1.1887, as only this will form a new signal to sell the European currency in the hope of pulling down the pair to the support of 1.1849. A long-term goal will be the low of 1.1812, where I recommend taking profits. However, the euro will sharply drop only if German data comes out as weak, as well as good indicators on the labor market from ADP. A more interesting scenario for opening short positions is an upward correction to the resistance area of 1.1937. Forming a false breakout there will help make sure that there are sellers in the market, which will result in EUR/USD quickly returning to the support area of 1.1887. If bears are not active in the 1.1937 area, I recommend postponing short positions until the high of 1.1994 has been updated and sell from there for a rebound based on a correction of 20-30 points within the day.

Indicator signals:

Moving averages

Trading is carried out below 30 and 50 moving averages, which indicates the bears' attempt to build a downward correction for the euro.

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

The pair will be supported by the lower border of the indicator around 1.1870. In case of growth, the average border of the indicator in the 1.1930 area will act as a resistance, and you can sell immediately on a rebound from the upper border in the 1.1994 area.

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 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.