20.01.202515:01 Forex Analysis & Reviews: EUR/USD: Trading Plan for the U.S. Session on January 20th (Review of Morning Trades)

In my morning forecast, I highlighted the 1.0322 level as a key decision point for market entry. Let's look at the 5-minute chart to see what happened. The rise to 1.0322 occurred, but there was no false breakout at this level. The technical outlook has been revised for the second half of the day.

Requirements for Opening Long Positions on EUR/USD:

Given the complete absence of significant US economic data on Donald Trump's inauguration day, traders are likely to adopt a wait-and-see approach until any important news emerges. As such, trading is expected to remain within a sideways channel, favoring euro sellers.

Thus, I won't rush into long positions. A false breakout near the new support at 1.0298—the midpoint of the sideways channel—would provide a good entry point for buying, targeting resistance at 1.0328. A breakout and retest of this range would confirm a proper entry for long positions, with the target at 1.0352. The ultimate target would be the 1.0393 level, where I would take profit.

In the event of a decline in EUR/USD (which is more likely) and no activity around 1.0298 in the second half of the day, pressure on the pair will increase early next week. Sellers could then push the pair down to 1.0268. Only after a false breakout at this level will I consider buying the euro. Long positions on a rebound will be possible from 1.0241, targeting a 30-35 point upward correction intraday.

Requirements for Opening Short Positions on EUR/USD:

Sellers are not very active so far, as evidenced by the slight rise in the euro during the first half of the day. However, this could change quickly, so stay alert, especially to news related to Donald Trump's new administration.

If the euro rises further, a false breakout at 1.0328 would confirm the presence of major players in the market and provide a good entry point for short positions, targeting support at 1.0298, where moving averages support buyers. A breakout and consolidation below this range, along with a retest from below, would serve as another opportunity to sell, aiming for the 1.0268 low, which marks the lower boundary of the sideways channel. The ultimate target would be the 1.0241 level, where I would take profit.

If EUR/USD rises further in the second half of the day and bears fail to act near 1.0328, I will postpone short positions until the pair tests the next resistance at 1.0352, the weekly high. There, I would also sell, but only after a failed consolidation. Short positions on a rebound will be possible from 1.0393, targeting a 30-35 point downward correction.

The Commitments of Traders (COT) report for January 7 showed a reduction in both short and long positions. Given that the Federal Reserve's rate cuts are delayed until autumn this year, this points to strong medium-term positions for the US dollar. If upcoming US inflation and GDP data indicate growth, it could provide another reason to increase long positions on the dollar. According to the COT report:

• Non-commercial long positions decreased by 2,303 to 166,503.
• Non-commercial short positions fell by 7,743 to 230,627.
• The gap between long and short positions widened by 2,456.

Indicator Signals:

Moving Averages:

Trading is slightly above the 30- and 50-day moving averages, signaling further euro growth.

Note: The moving averages discussed are based on the H1 chart and differ from the classical daily moving averages on the D1 chart.

Bollinger Bands

In the event of a decline, the lower band near 1.0268 will act as support.

Indicator Descriptions:

• Moving Average: Defines the current trend by smoothing volatility and noise. Period – 50 (yellow on the chart); Period – 30 (green on the chart).
• MACD: Moving Average Convergence/Divergence; Fast EMA – 12, Slow EMA – 26, SMA – 9.
• Bollinger Bands: Period – 20.
• Non-commercial traders: Speculators like individual traders, hedge funds, and institutions using the futures market for speculative purposes.
• Long non-commercial positions: Total long open positions of non-commercial traders.
• Short non-commercial positions: Total short open positions of non-commercial traders.
• Net non-commercial position: Difference between short and long non-commercial positions.