To open long positions on EUR/USD, you need:
Last Friday I paid attention to the 1.1886 level and advised you to enter the market from it. Let's take a look at the 5 minute chart and talk about what happened. Low market volatility made it possible for euro bulls to protect support at 1.1886 in the first half of the day, where a false breakout created a buy signal. To my regret, the euro did not sharply rise further along the trend, and the movement from this level was around 13 points. After failing to surpass 1.1886 in the afternoon, the pair returned to this level and continued to trade around it.
The technical picture has not changed much since last Friday. Since we don't have any important fundamental reports today, both for the eurozone (retail sales in the eurozone in February are unlikely to affect the market) and for the United States: euro bulls will focus on surpassing and consolidating above resistance at 1.1910. We need to confirm the bulls' presence in the market in order to receive a signal to open new long positions. This will happen after the pair tests this level from top to bottom, since this scenario can create a convenient entry point for you to buy in order to sustain the upward trend in the area of a high like 1.1947, where I recommend taking profits. The next target will be 1.1987, but we can hardly reach this level at the beginning of the week. In case EUR/USD falls in the first half of the day, the bulls will have to think of a way to protect support at 1.1884. Forming a false breakout there (by analogy with the signal that I analyzed above) will result in creating a good entry point into long positions. If the bulls are not active in the 1.1886 area, then it is best to hold back from longs until the test of the lower boundary of the 1.1859 channel, on which the entire upward trend depends. You can open long positions immediately on a rebound once this level is tested, counting on an upward correction of 15-20 points within the day. The next big support is seen around 1.1828.
To open short positions on EUR/USD, you need:
Bears continued to make attempts to stop the euro's upward trend, and it seems they have learned from them. The pair may stay in the 1.1859-1.1910 horizontal channel for quite a while. Today, the bears must protect an important resistance at 1.1910. Forming a false breakout there in the first half of the day, along with weak data on the volume of retail sales in the eurozone for February this year, can result in creating a convenient entry point for short positions, in hope to end the euro's upward trend. A breakthrough and being able to settle below the 1.1884 level is also an important task, which was not done last Friday. Surpassing this level with a reverse test from the bottom up will only increase the pressure on the euro, which will push it to a more formidable support at 1.1859, where I recommend taking profits. If EUR/USD grows in the first half of the day and sellers are not active at the 1.1910 level then I recommend opening short positions only for a rebound from the next resistance at 1.1947, or even higher - around 1.1987, 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 formation of a sideways market.
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 upper border of the indicator around 1.1910 will lead to a new wave of growth for the pair. A breakout of the lower border of the indicator in the area of 1.1880 will increase pressure on the euro.
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.
