10.12.202413:15 Forex Analysis & Reviews: EUR/USD: Trading Plan for the U.S. Session on December 10th (Review of Morning Trades)

In my morning forecast, I highlighted the 1.0565 level and planned to make market entry decisions based on it. Let's analyze the 5-minute chart to see what happened. The rise and subsequent false breakout near 1.0565 provided a good selling opportunity, leading to the pair's decline to 1.0535 and yielding around 30 points in profit. The technical outlook has been revised for the second half of the day.

To Open Long Positions on EUR/USD:

The euro has lost ground against the U.S. dollar following news that inflation in Germany has decreased. This confirmed market expectations of more aggressive rate cuts by the European Central Bank, as price growth risks have become less pronounced.

This afternoon's data includes the NFIB Small Business Optimism Index, U.S. labor productivity in the non-manufacturing sector, and labor cost changes. However, these figures are unlikely to significantly impact currency markets.

If pressure on the pair persists after the data, I prefer to act near the new support at 1.0519, formed last week. A false breakout at this level would create a good condition for building long positions, targeting a rise to 1.0565, which has yet to be broken. A breakout and retest of this range would confirm a valid entry point for buying, with targets at 1.0593 and last week's high of 1.0627, where I plan to take profits. Testing this level would strengthen the euro's bullish market.

If EUR/USD declines and there is no buyer activity near 1.0519, as seems likely, pressure on the pair will increase, leading to a more substantial drop in the euro. In this case, I would enter long positions only after a false breakout near the 1.0474 support level. Immediate long positions on a rebound are planned at 1.0430, targeting an intraday correction of 30–35 points.

To Open Short Positions on EUR/USD:

If the euro rises in the absence of clear directional signals, defending the 1.0565 resistance level will be a priority for sellers in the second half of the day. A false breakout there, as described above, would create a selling opportunity with a target of 1.0519. A breakout and consolidation below this range, followed by a retest from below, would provide another selling opportunity, targeting 1.0474 and potentially returning control to the bears. The ultimate target for short positions would be 1.0430, where profits should be taken.

If EUR/USD rises in the second half of the day and bears show no activity around 1.0565 (where the moving averages are currently positioned), I will postpone selling until the next resistance at 1.0593. I will sell there only after a failed consolidation. Immediate short positions on a rebound are planned at 1.0627, targeting a 30–35 point downward correction.

Commitments of Traders (COT) Report:

The COT report for December 3 showed significant growth in both long and short positions, leaving the market's balance of power largely unchanged. Key U.S. inflation data is expected soon, which will shape the future of U.S. monetary policy and the dollar's trajectory.

If there are no major surprises in the data, the Fed is likely to cut interest rates, which could further weaken the dollar. According to the COT report, long non-commercial positions increased by 11,359 to 167,693, while short positions rose by 12,839 to 225,182, narrowing the gap between long and short positions by 463.

Indicator Signals:

• Moving Averages: Trading below the 30- and 50-day moving averages indicates attempts at further euro declines.
  • 50-period SMA (yellow)
  • 30-period SMA (green)
• Bollinger Bands: In the event of a decline, the lower boundary of the indicator at 1.0530 will act as support.

Key Indicator Definitions:

• Moving Average (SMA): Smoothens volatility to determine trends.
• MACD Indicator: Tracks the convergence/divergence of moving averages.
• Bollinger Bands: Measures volatility and potential support/resistance levels.
• Non-commercial traders: Speculators using futures markets for profit.
• Long/short positions: Reflect cumulative bullish or bearish speculative trades.