FX.co ★ EUR/USD: plan for the European session on September 24. COT reports. Euro bulls are determined to break 1.1754

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

Yesterday was on the side of the euro bulls', as the passions associated with the Federal Reserve meeting began to gradually subside. Let's take a look at the 5-minute chart and analyze the entry points that were formed. A disappointing report on activity in the services and manufacturing sector of the eurozone that was published in the first half of the day did not allow the bulls to rise above the resistance of 1.1723, which I emphasized in my morning forecast. An unsuccessful attempt to settle above 1.1723 resulted in forming a false breakout at this level and a signal to open short positions. However, as we can see, this did not lead to a major downward movement, and after a while the bulls still managed to seize the initiative. A breakthrough and reverse test of the 1.1723 level from top to bottom created a good entry point into long positions in continuation of the euro's growth, which caused the pair to recover by 25 points.

This morning we are waiting for quite interesting data on the indicator of the business environment, the indicator of expectations and the indicator of the situation from IFO Germany, which may slightly decrease in September. If the indicators exceed economists' forecasts, this will be an additional driver for the buildup of long positions in the euro in continuation of the upward correction. However, the main goal will be a breakthrough and consolidation above the 1.1754 resistance, from which we observed a rather large euro sell-off on Wednesday. Only such a scenario will lead to forming a new entry point into long positions with a subsequent recovery of the pair to the 1.1776 area. The next target will be the area of 1.1806, where I recommend taking profits. However, it will only be possible to reach this level closer to the second half of the day, when Federal Reserve Chairman Jerome Powell's next speech will take place. In the event that EUR/USD declines during the European session, the bulls' primary task is to protect the support at 1.1723, where the moving averages play on their side are. Only a false breakout there will lead to forming a signal to open long positions in hopes of an upward correction to the resistance of 1.1754. If the bulls are not active in the 1.1723 area, the situation may become seriously complicated. Weak data for Germany may lead to a breakthrough of this range. In this case, I advise you to open long positions in EUR/USD only after a false breakout in the 1.1692 area, but you can buy the euro immediately on a rebound only at a new local low of 1.1665, or even lower - in the 1.1628 area, counting on an upward correction of 15-20 points within the day.

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

The bears will try to regain control of the market, and for this they need very weak data on Germany for September and firm statements from Powell about the intention to actively scale down the program to buy bonds later this year. The first priority is to protect the resistance at 1.1754. Forming a false breakout there will lead to creating the first entry point to short positions, counting on a further downward trend within the day. An equally important goal is a breakthrough and consolidation below the support at 1.1723, which acts as a kind of middle of the temporary horizontal channel. A reverse test of this level from the bottom up will return the pressure to the pair and form another signal to sell the euro with a renewal of the week's low at 1.1692. A breakthrough of this range will open a direct road to new levels 1.1665 and 1.1628, where I recommend taking profits. If EUR/USD rises in the first half of the day and there are no bears at 1.1754, it is best to postpone selling until the test of the larger resistance at 1.1776. I recommend selling the pair immediately on a rebound counting on a downward correction of 15-20 points, but only from a new high of 1.1806.

I recommend for review:

The Commitment of Traders (COT) report for September 14 revealed that both long and short positions have decreased. All this is a consequence of the wait-and-see attitude of traders at the beginning of this fall, when the Federal Reserve may shed light on its further monetary policy. Much will now depend on how the US authorities solve the problem of the national debt limit, which is already putting pressure on stock markets returning demand for the US dollar, which harms risky assets. This week, the situation on this issue should somehow become clearer. The demand for risky assets is also limited due to the high likelihood of another wave of the spread of the coronavirus, and its new strain Delta. All this will force the European Central Bank to continue to adhere to a wait-and-see attitude and maintain a stimulating policy at current levels, which limits the upward potential of the EUR/USD pair. The COT report indicated that long non-commercial positions fell from 189,904 to 186,554, while short non-commercial positions fell from 163,596 to 158,749. By the end of the week, the total non-commercial net position slightly rose to 27,805 from the level of 26,308. The weekly closing price dropped from 1.1870 to 1.1809.

Indicator signals:

Moving averages

Trading is carried out above 30 and 50 moving averages, which indicates an attempt to continue the upward correction in the pair.

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 the classic daily moving averages on the daily D1 chart.

Bollinger Bands

In case of a breakthrough of the upper border of the indicator around 1.1754, the demand for the euro will increase. Surpassing the lower border of the indicator in the area of 1.1720 will lead to a larger fall in the pair.

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