To open long positions on EURUSD, you need:
In the first half of the day, I paid attention and focused on the resistance of 1.1799. Let's look at the 5-minute chart and talk about what happened. We see how the bulls are trying to update the level of 1.1799, but it is not possible to get out of this range. Weak fundamental data on the eurozone leads to pressure on the euro. But all the efforts of the bears did not allow them to get even to the support of 1.1773, after which the pair returned and consolidated above the resistance of 1.1799. Its top-down test formed an entry point for long positions in the continuation of the upward trend. As a result, the upward movement was about 25 points and the market stopped near the next resistance of 1.1824.
The US session promises to be quite interesting, as the chairman of the Federal Reserve System, Jerome Powell, will speak. Everything will depend on how Powell reacts to yesterday's inflation data. If it takes a tough and unapproachable position, the euro can strengthen its position even more. Therefore, buyers will most likely focus on a breakout and consolidation above the resistance of 1.1824 in the second half of the day. The test of this level from top to bottom forms a new entry point into long positions to restore the euro to the maximum of 1.1849, where I recommend fixing the profits. A more distant target will be the level of 1.1878. If the pressure on EUR/USD returns in the afternoon, and Powell expresses concern about high inflation rates, it is best not to rush into purchases. The optimal scenario would be the formation of a false breakdown in the support area of 1.1799. It is possible to buy a pair immediately for a rebound in the expectation of a reverse upward movement of 15-20 points within the day only from a larger minimum of 1.1773.
To open short positions on EURUSD, you need:
The bears are not particularly in a hurry to return to the market, as they are well aware that the Fed chairman will take a wait-and-see position. The next formation of a false breakdown at the level of 1.1824 after the speech of the head of the Federal Reserve forms a really good signal to open short positions, counting on the pair's fall to the support of 1.1799. A more distant goal will be the minimum of today in the area of 1.1773, where I recommend fixing the profits. In case of further growth of EUR/USD during the US session after the speech of the head of the Fed, the bears' task will be no less important to protect the resistance of 1.1849. The formation of a false breakout forms an entry point for short positions in the continuation of the morning bear market. If there is no activity of sellers, it is best to postpone sales until the test of a larger resistance of 1.1878, which coincides with the maximum of this week. You can immediately sell the pair for a rebound based on a downward correction of 15-20 points.
Let me remind you that in the COT report (Commitment of Traders) for July 6, due to the sharp growth of short positions, it was possible to observe a reduction in the overall positive net position. This balance of forces does not take into account the growth of the pair, which was observed at the end of last week after the European Central Bank raised its inflation target to 2.0% and admitted that it would allow exceeding the target for some time in the future. It turned out to be enough for euro buyers to start building up long positions. Now the focus will be on the meeting of the European regulator, which will be held on July 22, and at which changes in monetary policy will be announced. Until then, any decline in the European currency will be considered as a good reason to increase long positions. The COT report indicates that long non-commercial positions increased from the level of 209,058 to the level of 212,998, while short non-commercial positions increased from the level of 121,912 to the level of 135,808. This week, there are no important fundamental statistics on the eurozone, so the focus will be shifted to inflation in the US, and the volume of retail sales. The further direction of the market depends on these indicators. But whatever they are, the key to the growth of the European currency is the economic recovery in the summer. Thus, I recommend betting on the growth of risky assets. The total non-commercial net position decreased from the level of 87,146 to the level of 77,190. The weekly closing price fell from 1.1928 to the level of 1.1862.
Signals of indicators:
Moving averages
Trading is conducted around 30 and 50 daily moving averages, which indicates an attempt by the bulls to return the market under their control.
Note: The period and prices of 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 breakthrough of the upper limit of the indicator in the area of 1.1824 will lead to a new wave of euro growth.
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.
