To open long positions on EUR/USD, you need:
Several signals to enter the market were formed yesterday. Let's look at the 5-minute chart and analyze the entry points: in my morning forecast I focused on the 1.2025 support level and recommended opening long positions from it. You can clearly see how the bulls managed to form a false breakout in the 1.2025 area, creating an excellent entry point into long positions from there. At the same time, the main target is still the 1.2079 level, which we did not reach, but the upward movement was more than 40 points. The pair managed to surpass this area by repeatedly returning to the support area of 1.2025 in the afternoon. A reverse test of the 1.2025 level from the bottom up had created a good signal to open short positions, however, it was not possible to reach the set goal here either. As a result, the downward movement was about 30 points.
To date, I have revised the technical picture for the pair and the scenario for the first half of the day is as follows: the bulls need to defend the 1.1996 support, forming a false breakout there (by analogy with what I analyzed above) can create a good entry point for long positions in hopes that EUR/USD would rise to the middle of the horizontal channel at 1.2034. In the event of a breakthrough and consolidation at this level, with a reverse test from top to bottom, one can count on continuing the upward trend in the area of resistance at 1.2069 that was formed yesterday. I recommend taking profits there. Quite a lot of fundamental reports on eurozone activity in the month of April will be released today. Data worse than economists' forecasts will surely increase the pressure on the pair. If we don't see much activity in the support area of 1.1996 during the European session, then I recommend holding back from long positions until the 1.1944 low has been renewed, from where you can buy the euro immediately on a rebound, counting on an upward correction of 20-25 points within the day. The next big support is seen at the 1.1880 area.
To open short positions on EUR/USD, you need:
Bears continue to put pressure on the euro in order to form a downward correction. The main task in the first half of the day is to break the 1.1996 support, being able to test it from the bottom up can create a good signal to open short positions in hopes of a downward trend towards the 1.1944 low. A similar breakthrough and test of this level will open a direct road to the next target in the 1.1880 area, where I recommend taking profits. If the data on manufacturing activity and activity in the service sector of the eurozone countries manage to surprise traders, then it is best not to rush to sell: forming a false breakout in the resistance area of 1.2034 creates a good entry point to the market, counting on the continuation of the pair's fall. But I recommend selling EUR/USD immediately on a rebound only from a high like 1.2069, and then, counting on a correction by 20-25 points within the day.
The Commitment of Traders (COT) report for April 13 revealed that the indicators of long and short positions underwent a number of changes - both of them decreased, which indicates that traders are being more cautious. Take note that long positions continued to decline, but at a slower pace, which may signal the end of the bear market. A lot of underwhelming fundamental reports from the eurozone last week, as they turned out to be either worse than economists' forecasts, or coincided with them, and this limits the pair's growth potential. However, talk that the European Central Bank is beginning to think about curtailing the bond repurchase program as early as the third quarter of this year makes investors look closely at risky assets, which will favorably affect the euro's position in the near future. The news that the vaccination program carried out in the EU countries is starting to yield results allows us to count on the lifting of restrictions and a more active recovery of the eurozone services sector, which will inspire hope for an improved economic outlook and return the EUR/USD to an upward trend.
The COT report indicated that long non-commercial positions fell from 192,230 to 190,640, while short non-commercial positions fell from 124,708 to 123,789, indicating profit taking on short positions and a more cautious approach from the bears. As a result, the total non-commercial net position continued to fall and hit 66,851 against 67,522 against a week earlier. But the weekly closing price significantly rose to 1.1911 against 1.1816 against last week.
Indicator signals:
Moving averages
Trading is carried out below 30 and 50 moving averages, which indicates an attempt by the bears to take control of the 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
Surpassing the average border of the indicator in the area of 1.2030 will lead to a new wave of growth for the pair. Surpassing the lower border of the indicator around 1.1996 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.
