EUR/USD: Plan for the European Session on December 11. The Euro Continues to Rise

[Ben Graham]

Yesterday, several entry points into the market were formed. Let's take a look at the 5-minute chart and analyze what happened there. In my morning forecast, I highlighted the 1.1649 level and planned to make market-entry decisions from that level. The rise and formation of a false breakout around 1.1649 provided a sell entry for the euro, resulting in a slight 20-pip decline in the pair. In the second half of the day, another false breakout around 1.1649 allowed buying the euro, which led the pair to rise towards the target level of 1.1703.

To Open Long Positions on EUR/USD:

Yesterday, the Federal Open Market Committee voted 9 to 3 to lower the key interest rate by 0.25% to a target range of 3.5%-3.75%. This led to a weakening of the dollar and a strengthening of the euro. In addition, the Federal Reserve announced that it will begin buying short-term Treasury bonds starting December 12, effectively turning on the printing press again. While the scale of these purchases is not yet comparable to classic QE, the Fed's actions are aimed at supporting the economy. As for today, only the quarterly unemployment rate in Italy and a Eurogroup meeting are expected. These events are unlikely to negatively impact the euro. However, if the pair declines, I expect initial signs of buyers around the support level of 1.1676. I plan to buy there only after a false breakout forms, which will provide an entry point for long positions with the aim of recovering to 1.1706. A breakout and a retest of this range from above will confirm the right actions to buy euros, anticipating a larger push towards 1.1726. The furthest target will be the high at 1.1753, where I will take profits. If the EUR/USD declines and there is a lack of activity around 1.1676, selling pressure on the pair will intensify, and bears will try to overshadow yesterday's gains. Sellers will also look to reach the next interesting level of 1.1649, and only the formation of a false breakout there will be a fitting condition for buying euros. I plan to open long positions immediately on a bounce from the low of 1.1619 with a target for an upward correction of 30-35 pips intraday.

To Open Short Positions on EUR/USD:

Sellers of the pound experienced another defeat yesterday, but not everything is so straightforward. The Federal Reserve's mixed stance can quickly turn in favor of the dollar, leading to a market reversal. In the event of further EUR/USD growth in the first half of the day, bears can aim for the nearest resistance at 1.1706. Only the formation of a false breakout will provide an entry point for short positions, with the aim of moving to the support level at 1.1676. A breakout and settlement below this range against very weak data from Italy, along with a retest from below, will be another suitable option for opening short positions targeting the area of 1.1649. The furthest target will be the 1.1619 area, where I will take profits. If EUR/USD moves up in line with the trend and there are no active bearish actions at 1.1706, buyers will have a good opportunity to continue developing the bullish market. In this case, it is best to postpone short positions until a larger level is reached at 1.1726. Selling there will only be after a failed breakout. I plan to open short positions immediately on a bounce from 1.1753, targeting a 30-35-pip downward correction.

For Reference:

Due to the government shutdown in the US, fresh Commitment of Traders data is not being published. As soon as the current report is prepared, we will publish it immediately. The last relevant data is only from October 28.

In the COT report (Commitment of Traders), both long and short positions have increased. Expectations of further rate cuts by the Federal Reserve continue to exert pressure on the US dollar. The COT report indicates that long non-commercial positions increased by 5,893 to 250,400, while short non-commercial positions jumped by 10,312 to 143,067. As a result, the spread between long and short positions narrowed by 1,065.

Indicator Signals:

• Moving Averages: Trading is above the 30-day and 50-day moving averages, indicating further growth for the euro.
• Note: The periods and prices of the moving averages are considered by the author on the hourly H1 chart and differ from the general definition of classic daily moving averages on the daily D1 chart.
• Bollinger Bands: In the event of a decline, the indicator's lower boundary will act as support around 1.1619.

Indicator Descriptions:

• Moving Average: (average, determines the current trend by smoothing volatility and noise). Period – 50. Marked in yellow on the chart.
• Moving Average: (average, determines the current trend by smoothing volatility and noise). Period – 30. Marked in green on the chart.
• MACD Indicator: (Moving Average Convergence/Divergence). Fast EMA – period 12. Slow EMA – period 26. SMA – period 9.
• Bollinger Bands: Period – 20.
• Non-Commercial Traders: Speculators, such as individual traders, hedge funds, and large institutions, using the futures market for speculative purposes and meeting certain requirements.
• Long Non-Commercial Positions: Represents the total long open position of non-commercial traders.
• Short Non-Commercial Positions: Represents the total short open position of non-commercial traders.
• Total Non-Commercial Net Position: The difference between the short and long positions of non-commercial traders.

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