In my morning forecast, I focused on the 1.0548 level and planned trading decisions based on it. Let's look at the 5-minute chart and analyze what happened. A decline followed by the formation of a false breakout at 1.0548 provided an excellent entry point for long positions, resulting in a rise of over 20 points. The technical picture has not been revised for the second half of the day.
The euro responded with a decline to weak European statistics, but as seen on the chart, there was no strong interest in further active selling. In the second half of the day, the U.S. Import Price Index is the primary release, so we can expect further correction by the pair toward the end of the week. I plan to act in the same way as during the morning session.
If pressure returns to the pair, a false breakout near 1.0458—similar to the scenario analyzed earlier—will serve as a good condition for adding long positions, targeting a recovery toward 1.0484. A break and retest of this range will confirm a valid entry point for buying with the goal of reaching 1.0510. The furthest target will be the 1.0535 maximum, where I will lock in profits. Testing this level would revive the chances of a bullish market for the euro.
In the event of a decline in EUR/USD and lack of activity near 1.0458 in the second half of the day, pressure on the pair will increase, leading to a more significant drop. In this case, I will wait for a false breakout near the 1.0430 support to enter long positions. I plan to buy on a direct rebound only from 1.0394, targeting an intraday correction of 30–35 points.
If the euro rises, protecting the 1.0484 resistance will be a priority for sellers in the second half of the day. A false breakout at this level will help maintain the bearish momentum and provide an entry point for short positions, targeting the 1.0458 support. A break and retest of this level from below will serve as another solid entry for selling, aiming for the 1.0430 minimum, which will shift the market back in favor of the bears. The furthest target will be the 1.0394 area, where I plan to lock in profits.
If EUR/USD rises further in the second half of the day and there's no significant bearish activity around 1.0484, where moving averages currently favor the bears, I will delay selling until the pair tests the next 1.0510 resistance. I will also sell from there, but only after an unsuccessful consolidation. If no downward movement occurs there, I plan to open short positions on a direct rebound near 1.0535, targeting an intraday correction of 30–35 points.
COT Report (Commitment of Traders):
The December 3 COT report showed a significant increase in both short and long positions, leaving the market balance largely unchanged. Upcoming U.S. inflation data will heavily influence the Federal Reserve's future monetary policy and the dollar's direction. If the data does not show significant changes, the Fed is likely to lower interest rates, which will further weaken the dollar. According to the COT report, non-commercial long positions increased by 11,359, reaching 167,693, while short positions rose by 12,839, totaling 225,182. As a result, the gap between long and short positions decreased by 463.
Moving Averages:
Trading is conducted below the 30- and 50-day moving averages, indicating continued downward pressure on the pair.
Note: The period and prices of the moving averages are considered on the H1 hourly chart and differ from the general definition of classic daily moving averages on the D1 daily chart.
Bollinger Bands:
In case of a decline, the lower boundary of the indicator near 1.0445 will act as support.
To Open Long Positions on EUR/USD:
The euro responded with a decline to weak European statistics, but as seen on the chart, there was no strong interest in further active selling. In the second half of the day, the U.S. Import Price Index is the primary release, so we can expect further correction by the pair toward the end of the week. I plan to act in the same way as during the morning session.
If pressure returns to the pair, a false breakout near 1.0458—similar to the scenario analyzed earlier—will serve as a good condition for adding long positions, targeting a recovery toward 1.0484. A break and retest of this range will confirm a valid entry point for buying with the goal of reaching 1.0510. The furthest target will be the 1.0535 maximum, where I will lock in profits. Testing this level would revive the chances of a bullish market for the euro.
In the event of a decline in EUR/USD and lack of activity near 1.0458 in the second half of the day, pressure on the pair will increase, leading to a more significant drop. In this case, I will wait for a false breakout near the 1.0430 support to enter long positions. I plan to buy on a direct rebound only from 1.0394, targeting an intraday correction of 30–35 points.
To Open Short Positions on EUR/USD:
If the euro rises, protecting the 1.0484 resistance will be a priority for sellers in the second half of the day. A false breakout at this level will help maintain the bearish momentum and provide an entry point for short positions, targeting the 1.0458 support. A break and retest of this level from below will serve as another solid entry for selling, aiming for the 1.0430 minimum, which will shift the market back in favor of the bears. The furthest target will be the 1.0394 area, where I plan to lock in profits.
If EUR/USD rises further in the second half of the day and there's no significant bearish activity around 1.0484, where moving averages currently favor the bears, I will delay selling until the pair tests the next 1.0510 resistance. I will also sell from there, but only after an unsuccessful consolidation. If no downward movement occurs there, I plan to open short positions on a direct rebound near 1.0535, targeting an intraday correction of 30–35 points.
COT Report (Commitment of Traders):
The December 3 COT report showed a significant increase in both short and long positions, leaving the market balance largely unchanged. Upcoming U.S. inflation data will heavily influence the Federal Reserve's future monetary policy and the dollar's direction. If the data does not show significant changes, the Fed is likely to lower interest rates, which will further weaken the dollar. According to the COT report, non-commercial long positions increased by 11,359, reaching 167,693, while short positions rose by 12,839, totaling 225,182. As a result, the gap between long and short positions decreased by 463.
Indicator Signals:
Moving Averages:
Trading is conducted below the 30- and 50-day moving averages, indicating continued downward pressure on the pair.
Note: The period and prices of the moving averages are considered on the H1 hourly chart and differ from the general definition of classic daily moving averages on the D1 daily chart.
Bollinger Bands:
In case of a decline, the lower boundary of the indicator near 1.0445 will act as support.
Indicator Descriptions:
- Moving Average (MA): Determines the current trend by smoothing volatility and noise. Period: 50 (yellow on the chart) and 30 (green on the chart).
- MACD (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 institutions, using the futures market for speculative purposes.
- Non-commercial long positions: The total long open positions of non-commercial traders.
- Non-commercial short positions: The total short open positions of non-commercial traders.
- Net non-commercial position: The difference between short and long positions of non-commercial traders.
