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

Yesterday there was an excellent signal to buy the euro that was formed in the afternoon. Before that, in my morning forecast, I paid attention to the 1.1797 level and recommended making decisions from it. Let's take a look at the 5 minute chart and talk about what happened. It can be clearly seen how, after the breakdown of 1.1797, the bears rapidly pushed the pair to the support level of 1.1773. Unfortunately, the reverse test of 1.1797 from the bottom up did not take place, so I missed the euro's fall and did not sell. Nothing really happened at the level of 1.1773. But during the US session, the repeated false breakout in the support area of 1.1766 resulted in creating an excellent signal to open long positions in the euro, which pushed the pair to jump by 60 points. Forming a false breakout at this level resulted in creating a signal to sell the euro in the afternoon.

Before we talk about the future prospects of the EUR/USD movement, let's look at what happened on the futures market and how the positions of the Commitment of Traders (COT) changed. The COT report for July 13 clearly showed a skew in the market towards sellers of risky assets. And although the long positions have not changed in any way, the sharp growth in short positions has caused the overall positive net position to fall. The fact that US inflation continues to grow and not only Federal Reserve Chairman Jerome Powell, but also US President Joe Biden, speaks about it, indicates the seriousness of the situation. And no matter how the central bank tries to convince investors that this is just a temporary phenomenon, the market continues to abandon risky assets in favor of safe haven assets, which is the US dollar. This week, the picture can only get worse, as the European Central Bank will hold a meeting on Thursday. At it, politicians will announce a new mandate regarding the long-term rate of inflation in the eurozone, which may lead to a revision of plans for monetary policy in the near future. This will be a certain shock for the euro and it is difficult to guess what the market reaction will be. But the lower the euro falls, the higher the demand for it will be in the medium term, since the appeal of risky assets has not gone away. The COT report indicates that long non-commercial positions remained virtually unchanged and decreased from the level of 212,998 to the level of 212,851, while short non-commercial positions increased from the level of 135,808 to the level of 153,138. In addition to the ECB's decision on Friday, we are waiting for interesting fundamental reports on the activity of the service sector and the manufacturing sector of the eurozone countries, which can definitely affect the euro's direction in the short term. The total non-commercial net position decreased from the level of 77,190 to the level of 59,713. The weekly closing price remained unchanged at 1.1862.

The bulls have problems with further growth, however, as the market showed yesterday, the bulls are not going to sit idly either. The German producer price index will be published this morning, which may indirectly affect the euro's direction if it goes beyond the forecasts of economists. You also need to look at the data on the current account balance of the ECB's balance of payments, but this figure is unlikely to bring turmoil to the market. Most likely, the struggle will continue to develop within the channel of 1.1765-1.1825. Only a breakthrough and consolidation at the level of 1.1806 with a reverse test from top to bottom can create a signal to open long positions in hopes of resuming the upward trend to the high of 1.1825. Only a breakdown of this area with a similar consolidation can create another entry point for long positions, which will lead EUR/USD to new local levels like 1.1849 and 1.1874, where I recommend taking profits. In case we receive weak data for Germany and a negative reaction to inflation, then it is best not to rush. Long positions can be opened subject to a false breakout in the area of the intermediate support at 1.1784, which was formed at the end of yesterday. I recommend buying EUR/USD immediately on a rebound only after the first test of the low of 1.1765, or even lower - from the level of 1.1740, counting on an upward rebound of 15-20 points within the day. The next big support is seen around 1.1715.

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

Apparently, the bears' failure from yesterday only slightly spoiled their plans. To regain control over the market, they need to keep the pair below the resistance of 1.1806 today. Forming a false breakout there, along with weak data on Germany, can create a signal to sell the euro with the purpose of falling to the intermediate support at 1.1784, the breakout of which will return the downward trend that was formed in the middle of last week. Such a scenario would open the way to this week's low at 1.1765. Surpassing this range will only be a matter of time. However, it is possible to open short positions at this level after we receive a good report on the US economy. This option will push EUR/USD even lower to the support at 1.1740, and then to the more distant level of 1.1715, where I recommend taking profits. If the bears are not active around 1.1806 and we receive a strong inflation report in Germany in the morning, then I recommend opening short positions only after a false breakout is formed in the 1.1825 resistance area. You can consider short positions immediately on the rebound only after the test of the high of 1.1849, or even higher - in the 1.1874 region, counting on a downward correction of 15-20 points.

Indicator signals:

Trading is carried out in the area of 30 and 50 moving averages, which indicates the uncertainty of the market regarding the succeeding direction.

Moving averages

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

A breakthrough of the upper border of the indicator in the area of 1.1815 will lead to a new wave of euro growth. Surpassing the lower border of the indicator in the area of 1.1770 will increase the pressure on 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.