26.01.202116:05 Forex Analysis & Reviews: EUR/USD: plan for the US session on January 26 (analysis of morning trades)

To open long positions on EURUSD, you need to:

In my morning forecast, I paid attention to the level of 1.2138 and recommended to act based on it. Let's look at the 5-minute chart and talk about what happened. We see how the bears achieve a breakout of this range and continue to move the euro further down. However, after the initial consolidation below 1.2138, no entry point was formed. Only a reverse test of this level from the bottom up towards the middle of the day formed a sell signal for the euro, however, this did not lead to a strong fall, after which trade returned to this range again, which forced us to revise the current support and resistance levels.

The focus of euro buyers in the US session will now be placed at the level of 1.2150. Only a break in this range with a top-down test will form a good signal to enter long positions to reach a maximum of 1.2187, where I recommend taking the profit. The euro buyers' longer-term goal remains a maximum of 1.2262. Weak data on the US consumer confidence indicator may lead to such a sharp activity in the euro. But it should be understood that the data should be much worse than the forecasts of economists. In the scenario of a repeated decline of the euro to the area of the day's low of 1.2110, only the formation of a false breakdown will be a signal to open long positions. If the bulls do not show activity, it is best to postpone long positions until the test of the minimum of 1.2055, from which 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:

An important task of the bears is to maintain control over the level of 1.2150, and only the formation of a false breakdown will be a signal to open short positions with the aim of further downward correction to the support area of 1.2110, where the euro's fall stopped today. A confident breakdown of this level and its test from the bottom-up forms an excellent signal to open short positions with the aim of a larger downward correction to the support area of 1.2055. Most likely, below the level of 1.2110, a fairly large number of stop orders will be placed by buyers who are still counting on the resumption of the bullish trend from January 18. Their demolition will put serious pressure on the euro and lead to a rapid fall of the pair. In the scenario of EUR/USD growth in the second half of the day above the resistance of 1.2150, it is better not to rush to sell. I recommend waiting for the update of the area of 1.2187 and opening short positions from there, provided that a false breakout is formed. You can sell EUR/USD immediately on a rebound only from the maximum of 1.2220, 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 19 recorded a sharp increase in long positions and a slight increase in short ones. Despite all the incoming fundamental data and the continuation of several quarantine restrictions until February this year in many European countries, buyers of risky assets continue to believe in a bullish trend. Especially the demand appears at each significant downward correction from the highs of this year, which allows new major players to enter the market. Vaccination disruptions in Europe are preventing buyers of risky assets from building up their positions more actively. However, the prospect of lifting the quarantine will keep the market positive. The risk of extending the quarantine measures in February of this year is still a deterrent to the growth of the euro. The COT report shows that long non-profit positions increased from the level of 228,757 to the level of 236,533, while short non-profit positions increased only from the level of 72,867 to the level of 73,067. Due to the sharp increase in long positions, the total non-commercial net position rose to 163,466 from 155,890 a week earlier.

Signals of indicators:

Moving averages

Trading is conducted in the area of 30 and 50 daily moving averages, which indicates the sideways nature of the market.

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 upper limit of the indicator in the area of 1.2150 will lead to a new wave of growth of the euro. A break of the lower limit of the indicator in the area of 1.2220 will increase the pressure on the pair.

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.