To open long positions on EURUSD, you need to:
In my morning forecast, I paid attention to the level of 1.1953 and recommended to act based on it. Let's look at the 5-minute chart and analyze the entry point. It is seen that after several unsuccessful attempts to break below the range of 1.1953, a false breakout is formed, which leads to the formation of a good entry point into long positions in the continuation of the bull market. After some time, the bears again try to break below 1.1953 – and again to no avail, which confirms the firm position of buyers.
The strategy and tactics for the second half of the day remained the same. During the US session, we are waiting for a speech by the Chairman of the Federal Reserve System, Jerome Powell, who may touch on the topic of inflation, which will lead to another increase in the European currency against the dollar. Therefore, as long as the trade is conducted above the support of 1.1953, the demand for the euro will remain. The next formation of a false breakout at this level (similar to the morning purchases that I discussed above) will lead to the formation of an additional signal to open long positions, and the nearest target of the bulls will be the resistance of 1.1987, where I recommend fixing the profits. Data on changes in industrial production in the euro area did not put serious pressure on the euro, as the actual value exceeded the forecasts of economists. In the afternoon, we are waiting for the speech of the President of the European Central Bank, Christine Lagarde, which can help buyers break above 1.1987. A test of this level from the bottom up will only strengthen the position of the euro, which will lead to a new high of 1.2047, where I recommend taking the profits. In the scenario of a decline in the euro and lack of activity in the support area of 1.1953: I recommend postponing long positions until the test of the larger area of 1.1920, where you can buy EUR/USD immediately on the rebound in the expectation of an upward correction of 20-25 points within the day. There are also moving averages that play on the side of buyers.
To open short positions on EURUSD, you need to:
Sellers did not cope with the task for the first half of the day, so during the American session, everything will have to start over. Only a return to the control of the support of 1.1953 and with a test of this level from the bottom up will form an entry point into short positions, which will increase the pressure on the pair and lead to its decline to the area of the minimum of 1.1920. In the event of a breakout of this range, which can occur only after the statements made by the chairman of the Federal Reserve System, you can continue to sell the euro already in the expectation of a return to the support of 1.1880, where I recommend taking the profits. If the demand for the euro continues today in the afternoon, and the president of the European Central Bank again talks about more active actions on the implementation of the stabilization fund - it is best to postpone short positions until the update of the new resistance of 1.1987. You can also sell EUR/USD for a rebound from a large high of 1.2047, based on a downward correction of 15-20 points within the day.
Let me remind you that in the COT report (Commitment of Traders) for April 6, the indicators of long and short positions have undergone several changes – short positions have grown strongly, which indicates that the market remains under the control of euro sellers. Long positions continued to decline, which led to another drop in the positive delta. Last week was filled with several fundamental statistics, however, more attention was drawn to the meeting of the International Monetary Fund, at which several agreements were reached on the extension of the debt deferral program until the end of this year and an initiative was created to support the poor countries most affected by the coronavirus. Last week, much was also said about the bureaucratic delay in the implementation of the EU recovery fund, which is still really limiting the upward potential of the euro in the near future.
For this reason, in the medium term, the market remains on the side of sellers of risky assets, which may lead to further formation of a downward trend. Investors expect the United States to be the first to start raising interest rates, which makes the dollar more attractive. This week's inflation data may seriously affect the balance of power in the market in favor of dollar buyers. The first signs of the formation of a medium-term bullish trend will be possible only after the lifting of restrictions and the recovery of the eurozone services sector, which will strengthen the hope for an improvement in the economic outlook and return the EUR/USD to the upward trend. The COT report shows that long non-profit positions decreased from the level of 194,764 to the level of 192,230, while short non-profit positions increased from the level of 121,024 to the level of 124,708. As a result, the total non-profit net position again continued its decline and amounted to 67,522 against 73,739 a week earlier. But the weekly closing price rose to the level of 1.1816 against 1.1768 last week.
Signals of indicators:
Moving averages
Trading is conducted above 30 and 50 daily moving averages, which indicates that the euro will continue to grow in the short term.
Note: The period and prices of the moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
Bollinger Bands
A break of the upper limit of the indicator in the area of 1.1965 will lead to a new wave of growth of the euro. A break of the lower limit in the area of 1.1945 will increase the pressure on the pair.
Description of indicators
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
- MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
- Bollinger Bands (Bollinger Bands). Period 20
- Non-profit 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 the short and long positions of non-commercial traders.
