To open long positions on EUR/USD, you need:
In the first half of the day, euro bulls failed to get the pair to settle above resistance at 1.1893. However, they did manage to surpass this level during the US session. Let's take a look at the 5 minute chart and talk about what happened and where to enter the market. After two unsuccessful attempts to rise above 1.1893, the bears achieved a false breakout, which led to forming an excellent entry point into short positions. However, the pair did fall by more than 20 points. The bulls returned to this level in the afternoon, and they managed to get the pair to settle above this range on the fourth attempt, which then resulted in creating an entry point into long positions further along the trend. A similar situation happened on Tuesday. Unfortunately, it was not possible to get to the target resistance levels, and after moving up by 25 points, the bulls fizzled out.
Today, the technical picture has undergone a number of changes, but the trading strategy has remained the same, as the bullish trend has continued. At the moment, the pair is stuck in the new horizontal channel of 1.1859-1.1885, and everything will depend on which side we get out of. If the bulls manage to achieve a breakthrough and settle above the 1.1885 resistance, and also test it from top to bottom, this will generate a signal for you to open new long positions in continuing the upward trend in the area of a high like 1.1913, where I recommend taking profits. The next target will be the 1.1947 level, but we can only get to this level if we receive good data on inflation in the euro area and the report of the European Central Bank on monetary policy. The divergence on the MACD indicator, which was observed yesterday, has already been fully won back, so you can confidently buy the euro if the quote surpasses resistance at 1.1885. In case EUR/USD falls in the first half of the day, the bulls need to think of a way to protect support at 1.1859, since a lot depends on it. Forming a false breakout there will lead to creating a good entry point for buying the euro. If the bulls are not active in the 1.1859 area, then it is best to postpone long positions until the test of the local low of 1.1828. However, you can open long positions from there immediately on a rebound, counting on an upward correction of 15-20 points within the day. The next big support is seen around 1.1797.
To open short positions on EUR/USD, you need:
Bears coped with their task yesterday and did not allow the euro to settle above the 1.1993 level, which has now transformed into resistance at 1.1885. It is today's main focus in case the euro grows. However, the bears' initial task is to fall and settle below the 1.1859 level, which is also the lower border of the head-and-shoulders technical pattern. This can be clearly seen on the hourly chart. A breakdown of this range can result in ending the upward trend, and a test of 1.1859 from the bottom up can create an excellent signal to open short positions with the nearest goal of renewing a low like 1.1828, where I recommend taking profits. A breakdown of this range will lead to a rapid decline in EUR/USD to the 1.1779 area, but this requires a very disappointing report on producer prices in the euro area and the European Central Bank report. The International Monetary Fund meeting will continue today, but it is unlikely to significantly affect the euro. In case EUR/USD grows in the first half of the day, forming a false breakout in the 1.1885 area will lead to creating a good entry point for short positions in hopes of a downward correction for the pair. If sellers are not active at this level, then I recommend opening short positions in EUR/USD only for a rebound from the next resistance at 1.1913, or even higher - around 1.1947, counting on a downward correction of 15-20 points within the day.
The Commitment of Traders (COT) report for March 30 revealed that the indicators of long and short positions underwent a number of changes - especially a strong growth in short positions, which indicates that bears are in control of the market. The delta fell as a result of a small decline in long positions and a sharp rise in short ones. European countries continue to be quarantined this spring due to a new strain of coronavirus and a weak vaccination program that was carried out in the winter. This is causing serious harm to the economy, and there is already talk among analysts that the eurozone's GDP may decline in the second quarter as well. Bureaucratic delays in the implementation of the EU Recovery Fund are another reason for the weak growth of the eurozone economy during the Covid-19 pandemic this year. For this reason, the market remains on the side of sellers of risky assets in the medium term, which may lead to forming a downward trend. Investors expect the United States to be the first to start raising interest rates, which makes the dollar more attractive. One can expect an improvement in the economic outlook for the eurozone only when restrictions are lifted and the service sector is restored, which will return the medium-term trend of strengthening EUR/USD.
The COT report indicated that long non-commercial positions declined from 195,500 to 194,764, while short non-commercial positions rose from 102,178 to 121,024. As a result, the total non-commercial net position continued to decline again and reached 73,739 against 93,332 a week earlier. The weekly closing price also dropped to the 1.1768 area against 1.1932 a week earlier.
Indicator signals:
Moving averages
Trading is carried out in the area of 30 and 50 moving averages, which indicates the bulls' problems with the euro's succeeding growth.
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 breakout of the lower border of the indicator in the area of 1.1859 will lead to a new wave of decline for 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.
