To open long positions on EURUSD, you need to:
In my morning forecast, I focused on the support for 1.2089 and the German data. Reports on the business environment indicator, the current situation assessment indicator, and the German IFO economic expectations indicator, which all turned out to be worse than economists' forecasts, did not allow the euro to continue growing, although a buy signal was formed. Let's take a look at the 5-minute chart and talk about what happened: it's clear to see how the bulls are forming a false breakout at 1.2089, which forms a good entry point to long positions. However, after rising by 20 points, the bad data on Germany quickly changes everything, and the euro returns down to the support of 1.2089, which this time is already breaking through.
In the afternoon, the bulls need to think about how to regain the level of 1.2089. Only a break and consolidation above this range with a reverse test from top to bottom forms a signal to open new long positions in the expectation of continuing the upward trend in the area of a new high of 1.2139, where I recommend taking the profits. The next target will be the level of 1.2183. However, it is unlikely that such an active growth will occur at the beginning of the week. If the US trading data on the volume of orders for long-term goods in the US will be better than expected – we can expect a larger decline in EUR/USD. In this case, I recommend opening long positions only if a false breakout is formed in the area of 1.2048, which forms a good entry point to buy with the main goal of returning to the level of 1.2089. In the scenario of no bull activity and near the low of 1.2048, it is best to postpone long positions until the lower border of the side channel of last week is updated in the area of 1.1998. From there, you can buy the euro immediately for a rebound with the aim of an upward correction of 20-25 points within the day.
To open short positions on EURUSD, you need to:
Sellers have achieved their goal and regained control over the level of 1.2089. The task for the second half of the day is very simple - to protect this range and turn it into major resistance. The reverse test from the bottom up of 1.2089 with or without a false breakout is a good signal to open new short positions in continuing the current downward correction to the minimum of 1.2048, where I recommend taking the profit. The next longer-range target will be the area of 1.1998. However, we will reach it only with very good fundamental data on the US economy. If the bears do not show activity in the area of 1.2089, and the bulls manage to regain this range – it is best to abandon sales before the EUR/USD reaches a new local maximum in the area of 1.2139. You can also sell the euro for a rebound from the level of 1.2183, based on a downward correction of 20-25 points within the day.
In the COT report (Commitment of Traders) for April 13, the indicators of long and short positions have undergone a number of changes – both short and long positions have decreased, which indicates a more cautious approach of traders to the market. It is important that long positions continued to decline but at a slower pace, which may signal the end of the bear market. Last week was full of not very good fundamental statistics on the euro area, which turned out to be either worse than economists' forecasts, or coincided with them, which limited the upward potential of the pair. However, talk that the European Central Bank is beginning to think about curtailing the bond repurchase program in the 3rd quarter of this year is forcing investors to look at risky assets, which will favorably affect the position of the European currency in the near future. The news that the vaccination program in the EU countries is beginning to give its result allows us to count on lifting restrictions and more active recovery of the eurozone services sector, which will provide hope for an improved economic outlook and return the EUR/USD to an upward trend. The COT report indicated that long non-profit positions declined from 192,230 to the level of 190,640.
In contrast, short non-profit positions declined from the level of 124,708 to the level of 123,789, indicating profit-taking on short positions and a more cautious bearish approach. As a result, the total non-profit net position continued its decline and amounted to 66,851 against 67,522 against a week earlier. But the weekly closing price rose significantly to the level of 1.1911 against 1.1816 against last week.
Signals of indicators:
Moving averages
Trading is conducted in 30 and 50 daily moving averages, which indicates that the market remains under the control of buyers.
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 lower limit of the indicator in the area of 1.2079 will lead to a fall in the euro.
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.
