To open long positions on EUR/USD, you need:
Another day passed under the banner of "calmness and silence". Traders ignored yesterday's reports on the US economy, which came out quite strong, and today they are waiting for important statements from Federal Reserve Chairman Jerome Powell, who, of course, will not say anything that could radically change the direction of the market. Despite the low volatility, one EUR sell signal was generated yesterday. Let's take a look at the 5-minute chart and analyze the entry point: in my afternoon forecast, I advised you to open short positions after forming a false breakout in the resistance area of 1.2089, which happened. One could clearly see how the bears defend this level, and so afterwards a good entry point was formed. However, the pair did not significantly fall amid low market volatility. The most that could be expected was a decline of 20 points.
From a technical point of view, nothing has changed much. No important fundamental reports in the first half of the day, so trading volume and volatility will remain at a low level until the Fed announces its decision on interest rates. Bulls still need to think of a way to regain the 1.2093 level. Considering that there are no important reports on the eurozone in the first half of the day, it will be very problematic to do this. There might be changes during the speech of European Central Bank President Christine Lagarde, and even then it is unlikely. A breakthrough and consolidation above the 1.2093 level with a reverse test from top to bottom creates a signal to open new long positions while expecting the upward trend to continue so the pair can reach a new high like 1.2133, where I recommend taking profits.
The next target will be the 1.2180 level, but we can only recover it after the Fed announces its decision on monetary policy. If the bulls are not active in the first half of the day, then you can expect EUR/USD to fall. In this case, I recommend opening long positions only if a false breakout forms in the 1.2047 area, which creates a good entry point to buy with the main goal of returning to the 1.2093 level. If the bulls are not active, and at the 1.2047 low in particular, then it is best to hold back from long positions until the lower border of the horizontal channel from the previous week near 1.1998 has been updated, from there you can buy the euro immediately on a rebound, counting on an upward correction of 20-25 points within the day.
To open short positions on EUR/USD, you need:
Although the bears are trying to break the bull market, they cannot do much. Yesterday's small rebound from resistance at 1.2089 ended with the pair smoothly returning to this level in today's Asian session. Now the main task in the first half of the day is to form a false breakout in the resistance area of 1.2093, which creates a good signal to open new short positions in continuation of the current downward correction so it can reach a low like 1.2047, where I recommend taking profits. In case of a larger spike in volatility in the first half of the day: the next target will be the 1.1998 area, which is the lower border of the horizontal channel of the previous week. However, we can only get there in case we receive unexpected statements on changes in monetary policy from Powell. If the bears are not active in the 1.2093 area, and the bulls manage to regain this range, it is best to refuse to sell until EUR/USD reaches a new local high in the 1.2133 area. You can also sell the euro on a rebound from the 1.2180 level, counting on a downward correction of 20-25 points within the day.
The Commitment of Traders (COT) report for April 20 showed that the indicators of long and short positions significantly changed - short positions decreased, and long positions sharply increased, which indicates that players have been actively buying the euro. The news that the vaccination program in the European Union is finally bearing fruit has supported the euro, as well as the fact that large eurozone countries will begin to more actively withdraw from quarantine in the near future. The European Central Bank's decisions on monetary policy did not significantly affect the euro's rate, since there weren't any changes, as well as talks on the part of the ECB administration about the high rate of the euro.
The COT report indicated that long non-commercial positions sharply grew from 190,640 to 197,137, while short non-commercial positions fell from 123,789 to 116,329, indicating an influx of new buyers with expectations that the euro would continue rising. Therefore, it is not surprising that any calculation for a downward correction for the pair in the short term has failed in the past week. As a result, the total non-commercial net position sharply rose from 66,851 to 80,808 a week earlier. The weekly closing price continued to rise to 1.2042 versus 1.1911 last week.
Indicator signals:
Moving averages
Trading is carried out in the area of 30 and 50 moving averages, which indicates the sideways nature of the market before important decisions.
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 upper border of the indicator in the area of 1.2095 will lead to a new wave of growth for 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.
