22.01.202115:18 Forex Analysis & Reviews: EUR/USD: plan for the US session on January 22 (analysis of morning trades)

To open long positions on EURUSD, you need to:

In my morning forecast, I paid attention to the level of 1.2178 and recommended to act based on it. Let's look at the 5-minute chart and talk about what happened. We see how the bulls make an unsuccessful attempt to break through this area, after which a false breakout is formed and a return to the level of 1.2178. A test of this level from the bottom up forms a convenient entry point into short positions, which I paid attention to in my forecast. Weak PMI activity data put pressure on the euro in the first half of the day.

The entire focus of buyers in the US session will be shifted today to a new resistance level of 1.2187, which was formed in the first half of the day. A break in this range with a top-down test will form a good signal to enter long positions to reach a maximum of 1.2220, where I recommend taking the profit. The longer-term goal of euro buyers remains a maximum of 1.2260, but such a breakthrough today will be possible only after very weak data on the PMI indices of the United States. If the bulls in the second half of the day again can not do anything at the level of 1.2187, then there is a risk of a downward correction to the support area of 1.2138, where only the formation of a false breakdown will be a signal to open long positions in the continuation of the trend. There are also moving averages that play on the side of euro buyers. If there is also no noticeable activity on the part of buyers in the area of 1.2138, it is best to wait for a downward correction to the more powerful area of 1.2098, where the lower border of the new ascending channel passes. From it, you can open long positions immediately for a rebound in the expectation of an upward movement of 20-25 points within the day.

To open short positions on EURUSD, you need to:

As long as trading is below the range of 1.2187, the pressure on the euro will continue. An important task for the bulls is to maintain control over this level, and in case of growth, the next formation of a false breakout will become an additional entry point into short positions with the aim of a downward correction at the end of the week. No less important task will be the support of 1.2138, at the first test of which the profit-taking on short positions will be noticeable. A break and test of the level of 1.2138 from the bottom up, as well as a break of the moving averages that pass in this range, forms an excellent signal to open short positions with the aim of a larger downward correction to the support area of 1.2098, for which an active confrontation will again unfold. In the scenario of EUR/USD growth in the second half of the day above the resistance of 1.2187, and this will happen only on weak data on the US economy, it is better not to rush with sales. I recommend waiting for the update of the area of 1.2220 and opening short positions, provided that a false breakout is formed. It is fashionable to sell EUR/USD immediately for a rebound only from the maximum of 1.2260, based on a downward correction of 20-25 points within the day.

Let me remind you that the COT report (Commitment of Traders) for January 12 recorded a sharp increase in long positions and a reduction in short ones. Buyers of risky assets continue to believe in a bullish trend, especially after such a large decline in the euro earlier this year, which allows new major players to enter the market. In Europe, vaccination against the first strain of coronavirus continues, which leads to the appearance of new euro buyers on the market. The likely approval of another $ 1.9 trillion aid plan for the US economy is likely to further dilute the US dollar's position. The risk of extending quarantine measures in February this year, both in Germany and in several other European countries, is a deterrent to the growth of the euro. Thus, long non-commercial positions rose from 224,832 to 228,757, while short non-commercial positions fell from 81,841 to 72,867. Due to the sharp drop in short positions, the total non-commercial net position rose to 155,890 from 143,902 a week earlier.

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 daily moving averages, which indicates the probability of growth in the short term.

Note: The period and prices of the 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 1.2160 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.