To open long positions on EUR/USD, you need:
Yesterday, the only signal to buy the euro was formed in the first half of the day, which did not bring the expected result. The bears were in control of the euro despite the fact that traders received a rather weak report on the US service sector in the afternoon. In yesterday's morning forecast, I paid attention to the 1.1882 level and advised you to make decisions on entering the market. Let's take a look at the 5 minute chart and see what happened. It is clearly seen how the bulls quite easily rose above the resistance of 1.1882 and then it was tested from top to bottom, creating a strong signal to open long positions in the continuation of the upward trend. However, the data on the index of business sentiment in Germany and the eurozone from the ZEW Institute completely canceled the bulls' plans. The sharp drop in the indicator led to the same rapid decline in risky assets against the US dollar.
This morning, traders will pay attention to the European Commission's forecast for the economy, as well as data on the volume of industrial production in Germany. On these fundamental indicators, the bears may make another attempt to surpass support at 1.1805, so the whole emphasis will shift to this level. Forming a false breakout there creates a signal to open long positions in hopes that EUR/USD would recover to the middle of the 1.1851 horizontal channel, which the bulls easily missed yesterday. It is possible to count on a breakthrough of this level only in case we receive very good fundamental indicators for the eurozone countries, which will be released this morning. I recommend opening long positions in ]continuation of the pair's growth above 1.1851 only after this level has been tested from top to bottom, which creates another buy signal for the purpose of returning the pair to the larger resistance at 1.1893, from which the euro fell yesterday. The next target will be 1.1930, where I recommend taking profits. In case the bulls are not active around 1.1805 and we receive inconclusive data on the eurozone, it is best not to rush into long positions. I advise you to wait for the update of support 1.1769 from where you can buy EUR/USD immediately on a rebound, counting on an upward correction of 15-20 points within the day.
To open short positions on EUR/USD, you need:
The bears are keeping the market under their control and are looking forward to a breakdown of the support at 1.1805. The whole emphasis in the morning will be at this level. Consolidating below 1.1805 and a test of this area from the bottom up can create a good signal to open short positions in continuation of the bear market with the goal of pulling down the pair to a low like 1.1769, its update will form a new downward trend in the euro and will open up the possibility of updating local lows around 1.1740 and 1.1715, where I recommend taking profit. If EUR/USD grows in the first half of the day, an equally important task for the bears is to protect the resistance at 1.1851, just below which there are moving averages playing on the side of the bears. Forming a false breakout there creates an entry point for short positions. If the bears are not active there, it is best to postpone selling until the test of the larger resistance at 1.1893, where you can immediately sell the pair on a rebound, counting on a downward correction of 15-20 points. The next major resistance is at the 1.1930 high.
There were minor changes in the Commitment of Traders (COT) report for June 29. One could observe a higher increase in short positions and only a slight retracement of long positions. After a series of central bank meetings, the market is gradually recovering, however, buyers of risky assets are not ready to act, as they fear changes in the Federal Reserve's monetary policy. The fact that the US labor market report indicated a rise in unemployment appears to have cooled the urge to buy the US dollar in the short term, which has hurt the EUR/USD downward trend that we have seen recently. This suggests that until the fall of this year, the central bank is unlikely to resort to changing the bond purchase program, which will negatively affect the prospects for the US dollar in the summer. Traders have no desire to buy the euro either, since no one expects such measures from the European Central Bank either. Apparently this week the pair will spend most of its time in a horizontal channel with the prospect of a slight weakening of the US dollar. The COT report indicated that long non-commercial positions rose from 207,863 to 209,058, while short non-commercial positions rose from 118,806 to 121,912. Good data on the European economy this week could revive the bulls, so everyone expects the eurozone economy to show strong growth in the summer. This is the key to a medium-term upward trend in the European currency. The total non-commercial net position decreased from 89,057 to 87,146. The weekly closing price increased from 1.1.1912 to 1.1928.
Indicator signals:
Trading is carried out below 30 and 50 moving averages, which indicates an attempt by the bears to seize the initiative of the market.
Moving averages
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
Surpassing the upper border of the indicator around 1.1840 will lead to a new wave of growth for the euro. A breakthrough of the lower border of the indicator in the area of 1.1815 will increase pressure on the euro.
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.
