To open long positions on EURUSD, you need to:
In my morning forecast, I paid attention to the level of 1.2214 and recommended that you decide it. Let's look at the 5-minute chart and talk about what happened. The data that was released today on inflation in the eurozone was ignored by traders, as it completely coincided with the forecast of economists. Market participants counted on a more active growth in consumer prices, as the bulls did not show much interest in the euro when it fell to the support level of 1.2214. The formation of a false breakout in this range led to forming a signal to open long positions. However, the active actions of buyers are not noticeable. If the pair does not return to the level of 1.2214 in the near future, the pressure on the euro will continue.
Given that there are no active buyers, I decided to review the nearest support and resistance levels. However, the overall strategy for the second half of the day remained the same. The bulls need to focus on defending the level of 1.2199, as further intraday growth depends on it. The formation of a false breakout will lead to the formation of a good entry point into long positions to resume the upward trend and return the pair to the area of the weekly maximum of 1.2242, where I recommend taking the profits. A breakout and a test of this level from top to bottom will lead to additional purchases to update the level of 1.2294.
Given that in the second half of the day, in addition to the publication of the minutes of the Federal Reserve meeting, nothing new is expected, most likely, the pressure on the euro will continue. If the bulls miss the support of 1.2199 at the beginning of the US session, the stop orders of buyers will likely be demolished below this range. It will quickly dump EUR/USD back to the support of 1.2153, from where you can open long positions immediately on the rebound with the expectation of an upward correction of 15-20 points within the day.
To open short positions on EURUSD, you need to:
Bears are active in the market, not meeting much resistance from buyers. A weak attempt to recapture the level of 1.2208 indicates a cautious approach of buyers before today's publication of the minutes of the April meeting of the Federal Reserve System. The primary task of sellers will be to return the support of 1.2199 under control. Only a real break and a test of this level from the bottom up will force buyers to take profits since there are several stop orders of speculative players below this level, the demolition of which will lead to a powerful movement of the euro down to the support of 1.2153, where I recommend exiting the market. Just below the level of 1.2199, there are moving averages that play on the side of euro buyers, so it will not be easy to break through this range. In the EUR/USD growth scenario in the second half of the day, new short positions can be considered after forming a false breakout in the resistance area of 1.2242, which was formed today during the European session. Suppose we do not see any activity from the bears. In that case, I recommend postponing sales until the next resistance of 1.2294, from which I recommend opening short positions immediately for a rebound in the expectation of a correction of 15-20 points within the day.
Let me remind you that the COT report (Commitment of Traders) for May 11 showed an increase in both short and long positions. However, there were more buyers this time, which led to the continued growth of the overall non-commercial position. Last week, everyone was waiting for data on US inflation, which set the tone. Its sharp growth provided only temporary support to the US dollar. However, traders managed to take advantage of this moment to open long positions after the EUR/USD pair corrected downwards. Only the news that the Fed will raise interest rates will lead to a serious increase in the US dollar. Until then, demand for risky assets will prevail, which will help the euro continue updating its monthly highs in the short term. The COT report shows that long non-profit positions jumped from the level of 206,472 to the level of 223,387, while short non-profit positions rose from 121,643 to the level of 129,480. It indicates an influx of new buyers in the expectation of continued growth of the euro, but with each update of the maximum, there are more and more willing to sell. The total non-profit net position increased from the level of 84,829 to the level of 93,907. The weekly closing price also increased significantly from the level of 1.20591 to 1.21406.
Signals of indicators:
Moving averages
Trading is conducted almost in 30 and 50 daily moving averages, which still retains the option of continuing the bull market in the afternoon.
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 1.2200 will decrease the euro. A break of the upper limit of the indicator in the area of 1.2242 will lead to new growth of the European currency.
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.
