To open long positions on EUR/USD, you need:
Several signals for entering the market were formed last Friday afternoon following the release of a rather weak report on the US labor market. Let's take a look at the 5 minute chart and break it down. The euro stopped rising in the resistance area of 1.2148, from where I recommended opening short positions immediately on a rebound. The pair fell short of reaching this level by just a couple of points, so those who were waiting for an accurate test of 1.2148, like me, probably missed this signal. Those who managed to sell could have earned around 40 points of profit. Another signal to open short positions was formed after returning to 1.2118. Its reverse test from the bottom up (I marked the area on the chart) created a signal to sell the euro, but this did not lead to a large downward movement. The fall was about 15 points. It was clearly wrong to count on anything more, especially after such a bad US report.
For today I have revised several nearest levels, however, the bulls will focus on resistance at 1.2181 and on the support at 1.2141. The most optimal scenario for opening long positions in continuing the pair's growth will be when a false breakout is formed in the support area of 1.2141. This will give the MACD indicator the chance to return to the zero mark, as well as pull up the moving averages to the 1.2141 area, which are playing on the side of the euro bulls. If traders are not active there, then it is best to postpone long positions immediately to rebound from a low like 1.2104, counting on an upward correction of 15-20 points within the day. Today, apart from the data on the Sentix investor confidence indicator, nothing interesting has been published, so we can count on the continuation of the bullish trend. A breakthrough and consolidation above resistance at 1.2181 will also be an important task for the bulls. However, when opening long positions from there, it is imperative to wait for this level to be tested from top to bottom, since forming a divergence on the MACD indicator can significantly limit the pair's growth potential. Surpassing 1.2181 will open a direct road to the highs of 1.2239 and 1.2294, where I recommend taking profits.
To open short positions on EUR/USD, you need:
The bears have a rather important task of protecting resistance at 1.2181. Since we can't count on fundamental reports as those will not be published today, then forming a false breakout there along with a divergence on the MACD indicator creates a signal to open short positions, which will push EUR/USD into the support area of 1.2141. A tougher struggle will begin for this level. Settling below this range with a reverse test of it from the bottom up can create a signal to open short positions for the purpose of returning to a low like 1.2104, where I recommend taking profits. There are also moving averages, playing on the side of the euro bulls. If bears are not active in the resistance area of 1.2181, and the bullish trend in EUR/USD will continue further, then I recommend postponing short positions until resistance at 1.2239 has been updated, or sell the euro immediately on a rebound from a high like 1.2294, counting on a downward correction at 15 -20 points within the day.
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 above 30 and 50 moving averages, which indicates the formation of a bull 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
The growth of the pair will be limited in the area of the upper border of the indicator 1.2205. In case the pair falls, support will be provided by the lower border of the indicator in the area of 1.2104.
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.
