To open long positions on EURUSD, you need to:
In the first half of the day, I paid attention to the support of 1.2105 and recommended that it make decisions on entering the market. Let's look at the 5-minute chart and analyze the entry points. The bears made an unsuccessful attempt to consolidate below this range, which led to forming a signal to open long positions. However, there was no rapid growth of the pair. The movement up from the level was about 10 points. The entire focus will now be shifted to the data on the US labor market, and the market's reaction to them is quite difficult to predict, so I recommend that you refrain from trading until the reports are released.
From a technical point of view, nothing much changed in the afternoon. The task of euro buyers is to protect the support of 1.2105, which they successfully did during the European session against the lack of important fundamental statistics. The next formation of a false breakout after the US data will help stop the bearish trend, which will lead to an upward correction to the resistance area of 1.2134, on which a lot depends today. A breakout and consolidation on this range with a test of it from top to bottom will form an additional entry point into long positions, which will open a direct road to the resistance area of 1.2157, where I recommend taking the profits. There are also moving averages that play on the side of sellers. As noted above, all the focus will be on the number of people employed in the US non-agricultural sector and the unemployment rate. Strong data will lead to a breakdown of the support of 1.2105. In this case, it is best to postpone long positions to the level of 1.2073, from which you can also buy the pair only when a false breakout is formed. Long positions can be opened immediately for a rebound only from the low of 1.2023, counting on a small rebound of 10-15 points inside the day against the trend.
To open short positions on EURUSD, you need to:
The bears will struggle to continue the downward trend that they have controlled for two days in a row. The initial task will be to protect the resistance of 1.2134. Only the formation of a false breakout will form a new sell signal for EUR/USD in the expectation of a further decline in the pair to the support of 1.2105. A breakout and a test of this range from the bottom up, together with strong data on the US labor market, form an additional entry point into short positions already in the expectation of an exit to the minimum of 1.2073, where I recommend fixing the profits. A more distant target will be the support of 1.2023. In the absence of bear activity in the area of 1.2134 and the sharp growth of the euro after the data, I recommend postponing sales until the update of the resistance of 1.2157. However, you can open short positions only when a false breakout is formed. I recommend selling EUR/USD immediately for a rebound only from a large high of 1.2183 with the aim 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 1.2213.
Let me remind you that the COT report (Commitment of Traders) for May 25 shows an increase in long positions and a reduction in short ones, which indicates an increase in demand for the European currency before the start of the last month of the second quarter of this year. It is expected that the European economy will show particularly strong growth in the summer, which will lead to new growth of the European currency in the area of annual highs. Data on the growth rate of the US economy in the 1st quarter of 2021 did not particularly surprise traders last week, which led to continued pressure on the US dollar. Traders now perceive any strong movements of the EUR/USD pair as a good opportunity to gain long positions in the continuation of the bull market. 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. However, we will know about this only by mid-June. Up to this point, every time the pair declines, the demand for risky assets will return. The COT report shows that long non-profit positions jumped from 232,330 to the level of 236,103, while short non-profit positions fell from the level of 132,472 to the level of 132,103. It indicates an influx of new buyers in the expectation of continued growth of the euro and a wait-and-see attitude on the part of sellers.
Given that the pair has been standing at local highs for quite a long time, the bulls accumulate long positions. However, the sellers are gradually getting rid of the euro. It indicates a possible breakdown of monthly highs in the near future and the continuation of the euro's growth. The total non-profit net position increased from 99,858 to 104,000. The weekly closing price also increased from the level of 1.21564 to 1.22142.
Signals of indicators:
Moving averages
Trading is conducted below 30 and 50 daily moving averages, which indicates the likelihood of a further decline in the euro.
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 1.2105 will lead to a major drop in the euro. A break of the upper limit of the indicator in the area of 1.2134 will form an upward correction for the pair.
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 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 the short and long positions of non-commercial traders.
