25.01.202114:12 Forex Analysis & Reviews: EUR/USD: plan for the US session on January 25 (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 acting on it. Let's look at the 5-minute chart and talk about what happened. We see how the bulls failed to reach this level, as a result of which no signals were formed to enter the market. Weak reports on the indices of the IFO Institute in Germany led to a decline in EUR/USD in the first half of the day, however, the bears also failed to reach the support of 1.2138, from which I recommended to act.

Exchange Rates 25.01.2021 analysis

The technical picture has not changed in any way compared to the first half of the day. The focus of euro buyers in the US session will be placed at the level of 1.2187. Only a break in this range with a top-down test will form a good signal to enter long positions with the target of reaching a maximum of 1.2220, where I recommend taking the profit. The euro buyers' longer-term goal remains a maximum of 1.2260. In the scenario of a further decline in the euro in the second half of the day, the bulls will need to think about protecting the level of 1.2138, where only the formation of a false breakdown will be a signal to open long positions in the continuation of the upward trend. Below this level is the lower border of the ascending channel, which will also support the bulls. In the scenario of no activity in the area of 12138, it is best to postpone long positions until the test of the minimum of 1.2098, from which you can open long positions immediately on the 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 of the bears 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. An equally important task will be the support at 1.2138, during the first morning test of which profit fixation on short positions was noticeable. A break and test of the level of 1.2138 from the bottom up form an excellent signal to open short positions with the aim of a larger downward correction to the support area of 1.2098. But before counting on a major drop in the euro, it is necessary to achieve a breakthrough and the lower limit of the ascending channel, which is located below the level of 1.2138. In the scenario of EUR/USD growth in the second half of the day above the resistance of 1.2187, it is better not to rush to sell. I recommend waiting for the update of the area of 1.2220 and opening short positions from there, provided that a false breakout is formed. You can 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.

Exchange Rates 25.01.2021 analysis

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 of 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 increased 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 increased to 155,890 from 143,902 a week earlier.

Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 daily moving averages, which indicates the probability of a decline in the euro 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

In the case of growth, the upper limit of the indicator in the area of 1.2187 will act as a resistance.

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.

*Analisis pasar yang diposting disini dimaksudkan untuk meningkatkan pengetahuan Anda namun tidak untuk memberi instruksi trading.

Miroslaw Bawulski,
Ahli analisa
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