To open long positions on EUR/USD, you need:
Last Friday, there was only one signal to enter the market in the afternoon. Let's take a look at the 5 minute chart and break down the entry point. Even during the European session, we did not manage to wait for a good signal for opening long positions from the 1.2034 level. Good data on activity in the manufacturing and services sectors of the eurozone countries made it possible for euro bulls to regain control of the market. One could see how the bulls surpassed 1.2034, but the reverse test of this area did not take place, so I was forced to skip this movement. However, the bears managed to protect the 1.2069 level on the first test during the US session, forming a false breakout there and creating a good entry point for short positions. The downward correction was about 25 points, afterwards the bulls took control of the market again.
The euro will stay in demand as long as trading is carried out above the 1.2089 level. The bulls need to defend the support at 1.2089 in the first half of the day, forming a false breakout there can create a good entry point into long positions, as we count on EUR/USD to rise the area of the new local high at 1.2139. In the event of a breakthrough and consolidation at this level, with a reverse test from top to bottom, we can expect the upward trend to continue to the resistance area of 1.2183, where I recommend taking profits. Important data on the German economy will be published today, and this could strengthen the euro. If we do not see much activity in the support area of 1.2089 during the European session, then I recommend holding back from long positions until the 1.2048 low has been updated, from where you can buy the euro immediately on a rebound, counting on an upward correction of 20-25 points within the day. There are also moving averages that play on the side of the euro bulls. The next big support is seen around 1.1998.
To open short positions on EUR/USD, you need:
Although the bears are trying to break the bull market, they cannot do much. The main task in the first half of the day is to break the support at 1.2089, the test of which from the bottom up can create a good signal for you to open short positions in hopes of a downward correction so the pair can reach a low like 1.2048. A disappointing report on business activity in Germany may push the pair to surpass and test this level, which will open a direct road to the next target in the 1.1998 area, where I recommend taking profit. If the bull market continues, then it is best not to rush with short positions: forming a false breakout in the resistance area of 1.2139 creates a good entry point to the market, counting on the pair's downward movement. You can sell EUR/USD immediately on a rebound from a high like 1.2183, 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 above 30 and 50 moving averages, which indicates that the euro will continue to rise in the short term.
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
In case the pair falls, support will be provided by the lower border of the indicator in the area of 1.2045.
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.
