To open long positions on EURUSD, you need to:
Given the low volatility of trading and the lack of important fundamental statistics in the first half of the day, it was not possible to wait to form signals to enter the market. The indicated levels were not tested, which preserves the balance of buyers and sellers for the American session. It is necessary to act in the same way as described in the morning forecast.
Given that the bears are close to the support of 1.2228, buyers of the European currency need to think carefully about how to protect it. The formation of a false breakout will be a good entry point to long positions in the expectation of stopping the intraday bearish trend and restoring the pair to the resistance area of 1.2272, which the bulls did not reach today. In the scenario of weak bull activity in the support area of 1.2228, it is best to postpone short positions until the update of the larger minimum of 1.2179, where you can buy the euro immediately for a rebound in the expectation of an upward correction of 15-20 points within the day. An equally important task for the bulls will be to break through the resistance of 1.2272. However, the absence of important fundamental reports in the second half of the day may limit the upward potential of the pair. Only a breakout and a test of this area from top to bottom on the volume will form a new entry point into long positions in the continuation of the upward trend and in the expectation of updating to a new monthly high in the area of 1.2313, where I recommend taking the profits. The more distant target will be the area of 1.23474. However, it will not be so easy to get to this level.
To open short positions on EURUSD, you need to:
The bears continued to fight for the market's return under their control and approached the support of 1.2228. Now the further downward correction of the pair depends on this level. A breakout and a test of this area from the bottom up form a new entry point for short positions to reduce to the area of 1.2179, where I recommend taking the profits. There are moving averages in the support area of 1.2228, which makes this level especially important for euro sellers. The more distant target of sellers is the area of 1.2103. In the case of EUR/USD growth in the second half of the day after the statements of representatives of the Federal Reserve System, only the formation of a false breakdown in the resistance area of 1.2272 forms a signal to open short positions. In the absence of bear activity in this range, I recommend postponing short positions until the resistance update at 1.2313, where you can open short positions immediately for a rebound in the expectation of a downward correction of 15-20 points within the day. The next major resistance passes only at a new local maximum in the area of 1.2347.
Let me remind you that the COT report (Commitment of Traders) for May 18 showed an increase in short and long positions. Last week, everyone was waiting for economic indicators for the eurozone, namely data on inflation and GDP growth rates. The reports coincided with economists' forecasts, which allowed the euro to maintain an upward potential in the pair. The publication of the Federal Reserve meeting minutes led to a sharp decline in risky assets, as there were ghostly hints among the committee members about the curtailment of the central bank's bond-buying program. However, the next day, the whole fall was played out. By the end of the week, the pressure on the euro returned after statements by the President of the European Central Bank, Christine Lagarde, that it was not yet time to wind down the stimulus support in the eurozone. The data that was released over the past week did not worry traders much, as all attention is now focused on central banks' monetary policy. Only the news that the Fed is seriously going to reduce the volume of bond purchases will lead to a serious increase in the US dollar. Up to this point, with each decline in the pair, the demand for risky assets will return, which will help the euro in the short term to continue to update the monthly highs. The COT report shows that long non-profit positions jumped from the level of 223,387 to 232,330, while short non-profit positions rose from 129,480 to the level of 132,472. It indicates an influx of new buyers in the expectation of continued growth of the euro, but there are more and more willing to sell with each update of the maximum. The total non-commercial net position increased from the level of 93,907 to the level of 99,858. The weekly closing price also increased from the level of 1.21406 to 1.21564.
Signals of indicators:
Moving averages
Trading is conducted in 30 and 50 daily moving averages, which indicates an attempt by bears to take over 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 1.2228 will increase the pressure on the euro.
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.
