12.08.202010:30 Forex Analysis & Reviews: EUR/USD: plan for the European session on August 12. COT reports (analyzing yesterday). Pressure on the euro will continue. All eyes on US inflation data

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

The European currency continued its downward correction against the US dollar after yesterday's reports on US producer prices as well as amid a sharp sell-off of gold. Most likely, the US dollar will continue to strengthen today. The Commitment of Traders (COT) reports for August 4 recorded a further increase in long positions and a reduction in short ones, which tells us about the continued interest of investors in risky assets, even at such high prices, as many bet that the dollar will weaken even more before the US elections and a more difficult situation with the spread of the coronavirus epidemic. The report shows an increase in long non-commercial positions from the level of 242,127 to the level of 262,109, while short non-commercial positions decreased from 84,568 to 81,461. As a result, the positive non-commercial net position sharply jumped to 180,648 against 157,559 a week earlier, indicating increased interest in buying risky assets even at current high prices.

As for today's intraday strategy, euro buyers are likely to show themselves only after testing the low of August 3 in the 1.1698 area. However, a signal to open long positions will form only if a false breakout forms there. Buy EUR/USD immediately on the rebound only from a low of 1.1648 based on a correction of 30-40 points within the day. An equally important task for the bulls is to return to the resistance of 1.1773, since consolidating it will be the first signal to complete the downward correction of EUR/USD and the probability of the pair returning to the resistance of 1.1843 and 1.1906, where I recommend taking profits.

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

Bears will continue to pull down the euro to the 1.1698 support test, so I do not recommend taking any actions in the middle of the channel now. Consolidating below this level, after weak reports on changes in industrial production in the eurozone, will be a signal to open short positions in anticipation of continuing the downward correction to the support area of 1.1648, as well as a test of a larger low of 1.1585, where I recommend taking profits. If the pair grows in the first half of the day, bears should think about protecting the resistance of 1.1773, but I recommend selling the euro from there only when a false breakout has formed. You can only make short positions immediately on the rebound from a high of 1.1843 to continue the bearish trend, based on a correction of 30-40 points within the day.

Indicator signals:

Moving averages

Trading is carried out just below the 30 and 50 moving averages, which indicates a downward correction forming in the short term.

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 classic daily moving averages on the daily D1 chart.

Bollinger Bands

Growth will be limited by the upper level of the indicator around 1.1790. A breakout of the lower border of the indicator at 1.1698 will increase pressure on the European currency.

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.
• The MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages). Fast EMA period 12. Slow EMA period to 26. The 9 period SMA.
• Bollinger Bands (Bollinger Bands). The 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.
• The total non-commercial net position is the difference between short and long positions of non-commercial traders.