| Trading plan for the EUR/USD pair for the week of December 21-25. New COT (Commitments of Traders) report. Markets continue to ignore the fundamental background and buy the euro. 2020-12-20 EUR/USD - 24H.  During the past week, the EUR/USD pair again continued to break all records of its own high cost. The euro currency continues to grow and be in demand in the foreign exchange market. In the first place in terms of importance among all factors, technical ones remain, because the fundamental background and COT reports have long been in favor of the fall of the European currency. Now there are simply no fundamental reasons for the growth of the euro. Thus, the euro/dollar pair continued its upward movement and overcame the resistance level of 1.2245 during this week. This means that the upward trend continues to persist on the lower timeframes, thus, you should continue to trade for an increase. It is very difficult to say when will the march to the north end. We continue to believe that the nature of the current strengthening lies solely in the "speculative factor". A lot of people are now comparing the rise of the euro with the rise of oil in 2008 to a record $ 145 per barrel. COT report.  During the last reporting week (December 8-14), the EUR/USD pair increased by 30 points. Recall that over the past few weeks, COT reports have shown an increase in the net position of non-profit traders. Simply put, the mood of professional players became more "bullish", although for several months they had been preparing for massive sales of the euro currency. In the last reporting week, the Non-commercial group closed 5,200 buy contracts and opened 10,800 sell contracts. That is, the net position decreased by 16 thousand, which is quite a lot. That is, professional players are again looking in the direction of selling the euro currency. And if we take into account the long-term perspective, then non-commercial traders continue to lean towards selling the euro currency. This point is again clear and understandable. The euro has been growing for a full nine months. All this time, it is extremely difficult for the dollar to even adjust. Therefore, the euro is now overbought. As for the indicators, they show the same decrease in the net position of non-commercial traders. The green line of the first indicator began to move again to meet the red line (net position of commercial traders), which is a signal of the end of the trend. Thus, we still expect the end of the euro's upward march, but at the same time, we remind you that until there are technical signals about the end of the upward trend, it is not recommended to trade down. There is no need to try to guess the downward reversal. The fundamental background for the pair continues to be present. That is, at this time (11 days before the New Year), there is (remained) a sufficient number of important and interesting topics. However, the absolute majority of them just remain an interesting topic. For example, the Fed held a meeting this week. The last one this year. And although it was again "passing", the American regulator did not give any new reasons to expect monetary policy easing. That is, there were no reasons after the Fed meeting to sell off the dollar again. However, market participants continued to do just that. Also this week, a new package of stimulus measures for the US economy was discussed again. It was discussed and not accepted. The epic is only slightly less interesting than the epic of Brexit and the London-Brussels trade negotiations. Since no package has yet been approved in the US Congress, traders again had no reason to sell the dollar and buy the euro. Well, as we have said many times, the fourth quarter for the European economy is likely to be a quarter of contraction, while the American economy is likely to grow by several percent. Thus, in economic terms, it is the US economy that is now in a better position. But as you can see, this also does not play any role for market participants. Therefore, there is only one thing to recommend here: continue to follow the trend as long as it persists. There's nothing else to do. Trading plan for the week of December 21-December 25: 1) The pair's quotes continue their upward movement and now, in the coming weeks, they will aim for the level of 1.2487. Although the COT report and the fundamental background continue to signal a possible and very likely fall in the pair's quotes and the baselessness of the current growth, it can continue. "Technique" now eloquently signals an upward trend, so it is recommended to trade for an increase. 2) To be able to sell the EUR/USD pair, you need to at least wait for the price to consolidate below the Kijun-sen lines. However, we do not expect such a development in the near future, as the price is quite far from this line. Thus, short positions can only be considered on lower timeframes if a downward trend is formed. Explanation of the illustrations: Price levels of support and resistance (resistance/support) – target levels when opening purchases or sales. You can place Take Profit levels near them. Ichimoku indicators, Bollinger Bands, MACD. Support and resistance areas – areas from which the price has repeatedly bounced. Indicator 1 on the COT charts – the net position size of each category of traders. Indicator 2 on the COT charts – the net position size for the "non-commercial" group. Trading plan for the GBP/USD pair for the week of December 21-25. New COT (Commitments of Traders) report. Negotiations on a trade deal for Brexit: there is no progress. 2020-12-20 GBP/USD - 24H.  The GBP/USD currency pair, after a very encouraging drop of 400 points a week earlier, rose by 500 this week. Thus, the price has updated 2.5-year highs and resumed the formation of an upward trend. As in the case of the euro, we continue to argue that there are no fundamental reasons for the pair's growth. That is, the pound sterling, like the euro currency, continues to grow solely on speculative factors. The British currency is overbought, and finding an answer to the question of why the pound is being bought if the UK is on the edge of an abyss called "Brexit without a deal" is generally impossible to explain. However, we have already said more than once that this is a market. Here you can never predict the movement of the pair with a probability of 100%. There are such periods when it is impossible to understand why a particular currency is growing at all. But 2020 also brought many other "surprises", so you can not be surprised at what is happening in the foreign exchange market. This is not the strangest thing that happened in the past year. Thus, at the moment, we can conclude that the upward trend continues, however, we are still waiting for its completion, since even speculative growth cannot continue forever. COT report.  During the last reporting week (December 8-14), the GBP/USD pair increased by 80 points. However, the COT report in the last reporting week again gave us such data that does not allow us to make any specific conclusions and forecasts. The changes were again minimal and contradictory. Professional traders closed 4 thousand buy-contracts and 2.3 thousand sell-contracts during the reporting week. Thus, the net position of the most important group of traders decreased by 2.3 thousand. This means that the mood of major players has become more "bearish". But it is best to pay attention to the first indicator now to understand what is happening with the mood of non-profit traders. The green line (as well as the red one) constantly changes the direction of movement: up and down. This indicates the lack of a clear and firm attitude of the "Non-commercial" group. Thus, now it is impossible to draw any conclusions at all. The pound has continued to grow for almost three months (and this is only the last round of its upward movement), but COT reports do not say that at this time the mood among non-profit traders became more "bullish". Or even that any group of traders at this time actively increased purchases of the pound. The fundamental background for the GBP/USD pair remained unchanged. During the week, the parties continued to negotiate a trade agreement, but came to nothing, there was no progress. Thus, today another deadline expires, which this time was already set by the European Union, and which also has no meaning. Recall that these deadlines were a huge number. But the Minister for European Affairs of France, Clement Bon, generally said that Brexit negotiations are likely to continue after Sunday. That is, this is exactly what we have talked about repeatedly. The negotiations will continue for as long as necessary. MEPS have previously said they could vote for the deal on December 28 if the terms of the agreement are agreed before midnight on December 20. At the time of writing, there was no news of a consensus being reached. Thus, trade negotiations may continue next week. We continue to wait for the parties to officially and publicly declare that the negotiations will be extended to 2021, or when they will officially put an end to the negotiations since it is not possible to reach an agreement. Recall that the European Parliament and the British Parliament still need to have time to read the text of the agreement (several hundred pages) and only then vote. There was no time for all this on November 15, and it is already December 20. Thus, from our point of view, the probability that the parties will have time before the New Year is negligible. This is what Boris Johnson and Ursula von der Leyen regularly state. Trading plan for the week of December 21-December 25: 1) The price resumed its upward movement without any problems and worked out the first resistance level of 1.3526. Thus, in the 24-hour timeframe, the next target for an upward movement is the level of 1.3734. We recommend that you continue to consider options for opening long positions on lower timeframes and do not try to guess the end of the upward trend. 2) Sellers are still quite weak. Last week, the bears tried to seize the initiative, but it all failed. Thus, for the possibility of opening short positions, it is now recommended to wait again, at least, for the price to consolidate below the critical line. If this condition is met, a downward trend may form in the 4-hour timeframe. Explanation of the illustrations: Price levels of support and resistance (resistance/support) – target levels when opening purchases or sales. You can place Take Profit levels near them. Ichimoku indicators, Bollinger Bands, MACD. Support and resistance areas – areas from which the price has repeatedly bounced. Indicator 1 on the COT charts – the net position size of each category of traders. Indicator 2 on the cot charts – the net position size for the "non-commercial" group.
Author's today's articles: Stanislav Polyanskiy  Graduated from Odessa State Economic University. On Forex since 2006. Writes analytical reviews about international financial markets for more than 3 years. Worked as a currency analyst in different finance companies for a long time including the biggest companies of Russia and Ukraine.
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