18.12.202013:09 Forex Analysis & Reviews: EUR/USD: plan for the American session on December 18 (analysis of morning deals)

To open long positions on EURUSD, you need to:

In the first half of the day, there were no changes from a technical point of view, and volatility decreased significantly. The euro is still holding its position, being in the area of the annual maximum. During the European session, euro buyers were helped by a report on indicators for assessing the current situation, economic expectations, and business conditions from the IFO of Germany. All indicators were much better than economists' forecasts, which indicates the stable state of the German economy during the second economic lockdown.

As noted above, the technical levels have not changed, and you can act exactly as I described in the morning forecast. European buyers in the first half of the day will be puzzled by the protection of the support level of 1.2226, where the pair is now declining. There are also moving averages that play on the side of buyers. Only the formation of a false breakout in the area of 1.2226 will help stop the bearish momentum, which will lead to the formation of a convenient entry point into long positions to continue the upward trend and return to a new maximum of 1.2271. A breakout and consolidation above this range, together with weak fundamental statistics on the US economy, will open new highs for euro buyers in the area of 1.2304 and 1.2339, where I recommend fixing the profits. If there is no activity of buyers in the area of 1.2226, a breakdown of this level may take place. In this case, it is better not to hurry with purchases, but to wait for the update of a larger minimum of 1.2181, from where you can open long positions immediately for a rebound in the expectation of an upward correction of 20-25 points within the day.

To open short positions on EURUSD, you need to:

Sellers of the euro are still aimed at regaining control over the level of 1.2226. Only fixing below this range and testing it from the reverse side will increase the pressure on the pair, which forms a good entry point into short positions. In this case, the main target of the bears will be the area of 1.2181, where I recommend fixing the profits. It is extremely doubtful to expect the euro to return to the support area of 1.2130 at the end of this week. If the bulls manage to protect the support of 1.2226, we can expect a resumption of the bull market and a return of EUR/USD to the annual maximum in the area of 1.2271. I recommend opening short positions from there only after forming a false breakout. It is best to count on sales for a rebound only after testing the levels of 1.2304 and 1.2339 with the aim of a downward correction of 15-20 points within the day.

Let me remind you that the COT report (Commitment of Traders) for December 8 recorded an increase in long and a reduction in short positions. Buyers of risky assets believe in the continuation of the bull market, and in the further growth of the euro after breaking the psychological mark in the area of the 20th figure. Thus, long non-profit positions rose from the level of 207,302 to the level of 222,521, while short non-profit positions decreased to the level of 66,092 from the level of 67,407. The total non-commercial net position rose to 156,429 from 139,894 a week earlier. It is worth paying attention to the growth of the delta, observed for the third week in a row, which completely negates the bearish trend observed at the beginning of this fall. A larger recovery can only be talked about after European leaders negotiate a new trade agreement with Britain.

Signals of indicators:

Moving averages

Trading is above 30 and 50 daily moving averages, which indicates a continuation of the bull market.

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 upper limit of the indicator in the area of 1.2271 will lead to a new wave of euro growth. A break of the lower limit of the indicator in the area of 1.2235 will increase the pressure on 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.