To open long positions on EUR/USD, you need:
There were no signals to enter the market yesterday afternoon, as volatility remained at a fairly low level, and the pair did not reach any of the levels I indicated. US private sector job growth, which accelerated in April this year but was worse than economists' forecasts, did not impress traders, nor did the service PMI report, which fell to 62.7 points in April after jumping to a record high of 63.7 points in March. All this was quite expected or close to economists' forecasts, therefore, there was no particular movement after reports were published.
Compared to yesterday, the technical picture has remained virtually unchanged, and the bulls' goals and objectives have remained completely the same. All that is worth paying attention to this morning is the change in the volume of orders in the German industry and the economic bulletin from the European Central Bank. Taking into account that Germany is not happy with the figures lately, it is possible that the euro will remain under pressure in the first half of the day. The bulls' primary task is to surpass the new resistance at 1.2025, which they did not reach yesterday. There are moving averages slightly below this level that limit the pair's growth potential. Only a concrete breakthrough and consolidation above 1.2025 with a reverse test from top to bottom can create a signal to open long positions in hopes for the euro to reach the resistance area of 1.2059, where I recommend taking profits. The next target will be the high at 1.2096. If the pair is under pressure in the first half of the day, and traders are not pleased with the eurozone reports, then I recommend looking at long positions only after forming a false breakout in the 1.1988 area. You can open long positions immediately on a rebound only at a new local low like 1.1958, counting on an upward correction of 15-20 points within the day.
To open short positions on EUR/USD, you need:
For the bears, the task is a bit easier: since they are in control of the market, all they need to do is to achieve a breakthrough and a reverse test from the bottom up at the level of 1.1988. Such a scenario will create a new entry point for short positions for the purpose of reaching the 1.1958 low, where I recommend taking profits. The next target will be the 1.1925 level. Weak data for the euro area will allow this scenario to be realized. If the reports turn out to be better than economists' forecasts, and the ECB's economic bulletin signals an acceleration of inflationary pressure after the coronavirus pandemic: you can count on short positions only in the resistance area of 1.2025, and then, subject to forming a false breakout there. If the bears are not active there, and the bulls manage to take this range for themselves, then it is best to refuse to sell until EUR/USD reaches a new local high in the area of 1.2059. You can sell the euro from this level immediately on a rebound, counting on a downward correction of 20-25 points within the day. The next major resistance is seen at the 1.2096 high.
The Commitment of Traders (COT) report for April 27 showed that both short and long positions have increased, but there turned out to be more for the latter, which caused overall non-commercial positions to increase. This suggests that players actively buy the euro and one can bet that the pair will strengthen even more after the downward correction. The Federal Reserve's decision on interest rates and monetary policy did not significantly affect the US dollar rate, as well as the next programs proposed by US President Joe Biden to stimulate economic growth in the near future through changes in the tax system. Given that the Fed will continue to adhere to the previous course, even despite the sharp economic jump, risky assets will still be in demand after the decline in the EUR/USD pair earlier this month. The COT report indicated that long non-commercial positions sharply jumped from 197,137 to 200,415, while short non-commercial positions rose from 116,329 to 119,448, indicating an influx of new buyers that expect the euro to continue rising. The more the euro corrects to the downside at the beginning of this month, the stronger the demand is. As a result, the total non-commercial net position sharply rose from 80,808 to 80,967. The weekly closing price continued to rise to 1.20795 from 1.2042 a week earlier.
Indicator signals:
Moving averages
Trading is carried out below 30 and 50 moving averages, which indicates that the bears retain 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
Volatility is very low, which does not provide signals to enter the market based on the indicator.
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.
