In my morning forecast, I paid attention to the 1.0750 level and recommended making decisions on entering the market from it. Let's look at the 5-minute chart and figure out what happened there. The lack of statistics on the eurozone had an expected effect on market volatility. For this reason, the bears easily defended the resistance of 1.0750, which led to the formation of a false breakdown and a signal to sell the euro. At the time of writing, the pair went down about 25 points and the pressure on the euro remained. The bears are now targeting the 1.0711 update. From a technical point of view, nothing has changed, nor has the strategy changed. And what were the entry points for the pound this morning?
To open long positions on EURUSD, you need:
Given that there are also no statistics in the afternoon, it is difficult to say what could lead to EUR/USD going beyond the side channel. I advise you to continue trading in it further. In the event of a further decline in the euro and a strong report on the US labor market trends index, which, in general, few people are interested in, only the formation of a false breakdown at the level of 1.0711 forms a signal to open long positions in the expectation of a more serious upward jerk in the afternoon and a return to the intermediate resistance of 1.0750, to break above which today, so far, it has not been possible. A breakout and a top-down test of this range will deal a serious blow to sellers' stop orders, forming a new signal to enter long positions with the possibility of updating the monthly maximum of 1.0785, where I recommend fixing the profits. It is unlikely to get to a more distant goal in the area of 1.0820. If EUR/USD declines and there are no buyers at 1.0711, the pressure on the euro will increase. Demolition of buyers' stop orders below this level will push the pair to 1.0673, so the best option for opening long positions will be a false breakdown. I advise buying EUR/USD immediately for a rebound only from the level of 1.0630, or even lower – around 1.0596 with the aim of an upward correction of 30-35 points within a day.
To open short positions on EURUSD, you need:Sellers coped with their tasks perfectly in the first half of the day, and while trading will be conducted below 1.0750, we can expect a further decline in the pair to the morning support area of 1.0711. In the case of another EUR/USD surge up in the afternoon, only the formation of a false breakdown at 1.0750, by analogy with what I analyzed above on the 5-minute chart, forms a signal to open short positions with the prospect of a return and a breakout of 1.0711 support. Given that trading is conducted in the area of moving averages, this adds even more uncertainty to the market. A breakdown and consolidation below 1.0711, as well as a reverse test from the bottom up of this range - all this will lead to an additional sell signal with the demolition of buyers' stop orders and a larger movement of the pair down to the 1.0673 area. A breakout and consolidation below 1.0673 may also take place. In this case, the more distant target will be the 1.0630 area, where I recommend completely exiting sales. In the event of an upward movement of EUR/USD during the US session, as well as the absence of bears at 1.0750, the situation will continue to develop on the side of euro buyers. In this case, we can talk about the continuation of the upward trend. The best option would be short positions when forming a false breakdown in the area of 1.0785. You can sell EUR/USD immediately for a rebound from the monthly maximum of 1.0820, or even higher – around 1.0853 with the aim of a downward correction of 30-35 points.The COT report (Commitment of Traders) for May 24 recorded a further increase in long positions and a reduction in short ones. Traders continued to open long positions with the expectation of a more aggressive monetary policy on the part of the European Central Bank. Although there were slightly fewer comments last week that the regulator would start raising interest rates in the near future, this did not significantly limit the pair's upward potential. It is now expected that the ECB Governing Council will raise the deposit rate by a quarter-point in July this year, then in September, and once in December - bringing it to 0.25% by the end of the year. However, some experts are confident that the Central Bank will be forced to act more aggressively – everything depends on this week's inflation data for May of this year. It is expected to jump immediately to 7.7% per annum, which may increase pressure on politicians. It is also expected that the key interest rate will be raised in September and December to 0.5% from zero, at which it is currently. The COT report indicates that long non-commercial positions increased by 6,302 from the level of 230,770 to the level of 237,072, while short non-commercial positions decreased by -12,289 from the level of 210,431 to the level of 198,142. As I have repeatedly noted, the low exchange rate of the euro makes it more attractive for medium-term traders, and the change in the balance of power in favor of buyers confirms this. At the end of the week, the total non-commercial net position increased to 38,930 against 20,339 a week earlier. The weekly closing price jumped to 1.0734 against 1.0556.Signals of indicators:Moving AveragesTrading is conducted around 30 and 50 daily moving averages, which indicates some market uncertainty.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 BandsIn the case of a decline, the lower limit of the indicator around 1.0710 will act as support. In case of growth, the upper limit of the indicator in the area of 1.0750 will act as resistance.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 use the futures market for speculative purposes and to 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.
