To open long positions on EURUSD, you need to:
As expected, against the background of the absence of important statistics and the upcoming meeting of the Federal Reserve System, the pair continued to trade in a narrow side channel, showing almost no signs of life. If you look at today's 5-minute chart, you will see how the euro has not reached any of the levels I have indicated due to the market's low volatility. Accordingly, there were no signals for entering the market. The absence of news in the first half of the day keeps the technical picture of the EUR/USD pair unchanged.
Most likely, before the publication of the results of the two-day meeting of the US central bank, trading will continue in a side channel. Only a break and consolidation above the level of 1.2093 with a reverse test from top to bottom forms a signal to open new long positions in the expectation of continuing the upward trend already in a new high of 1.2133, where I recommend taking the profits. The next target will be the level of 1.2180. However, we will reach it only after the outcome of the Fed meeting, provided that monetary policy is left unchanged. If the pair loses its positions in the second half of the day, then I recommend buying the euro only if a false breakout is formed in the area of 1.2047 with the main goal of returning to the level of 1.2093. In the scenario of no bull activity at the low of 1.2047, 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:
In the first half of the day, sellers did not even have to defend the resistance of 1.2093. The same situation was repeated yesterday, where after a slight decline, the demand for EUR/USD returned, which led to another equality in the market. At the time of writing, the pressure on the euro is gradually increasing, so the main task of the bears for the second half of the day is very simple – a break and consolidation below the support of 1.2047. A reverse test from the bottom up of this level, with or without a false breakout – all this is a good signal to open new short positions in the continuation of the downward correction to the minimum of 1.1998, where I recommend taking the profits. The next target will be the area of 1.1944. However, it can be counted on only after the meeting of the Federal Reserve System, provided that there will be significant changes in the bond purchase program. In the EUR/USD growth scenario, the bears should be active in the resistance area of 1.2089 in the second half of the day. The formation of a false breakout will be an excellent entry point to short positions. If the bulls manage to regain this range, it is best to give up selling until the EUR/USD reaches a new local high of 1.2133, where you can sell the euro immediately on a rebound in the expectation of a downward correction of 20-25 points within the day.
Let me remind you that in the COT report (Commitment of Traders) for April 20, the indicators of long and short positions changed quite seriously – short positions decreased and long positions increased significantly, which indicates more active purchases of euros from players. The news that the vaccination program in the European Union is bearing fruit supports the euro, as does the fact that in the near future, large countries in the eurozone will begin to withdraw more actively from quarantine. The European Central Bank's monetary policy decisions did not affect the European currency exchange rate much, as no changes were made and a talk from the ECB board about the high euro rate. The COT report shows that long non-profit positions jumped sharply from 190,640 to the level of 197,137. In contrast, short non-profit positions declined from 123,789 to the level of 116,329, indicating an influx of new buyers in the expectation of continued growth of the euro. Therefore, it is not surprising that any calculation for a downward correction of the pair in the short term last week failed. As a result, the total non-profit net position rose sharply from 66,851 to the level of 80,808 a week earlier. The weekly closing price continued its rise to the level of 1.2042 against 1.1911 last week.
Signals of indicators:
Moving averages
Trading is conducted below 30 and 50 daily moving averages, which indicates a small preponderance of sellers in the market.
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 1.2060 will lead to a fall in the euro. A break of the upper limit of the indicator in the area of 1.2095 will strengthen the euro's position.
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 specific 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.
