In my morning article, I turned your attention to 1.1030 and recommended making decisions with this level in focus. Now, let's look at the 5-minute chart and figure out what actually happened. The euro declined slightly but before a false breakout of this level. It lacked a few pips. A similar situation occurred at the resistance level of 1.1066. For the afternoon, the technical outlook remains unrevised as well as the trading strategy.
When to open long positions on EUR/USD:
The trajectory of the pair will largely depend on US GDP data for the first quarter. If the figure undershoots forecasts, demand for the euro could rise again. The pair is likely to climb higher. Alternatively, if the reading is better than expected, EUR/USD may drop to weekly highs. This is why the trading plan for the American session remains the same.
It would be extremely favorable to buy the euro on the decline from 1.1030 where the moving averages are passing in positive territory. A false breakout there will lead to a buy signal and a rise to the resistance level of 1.1066. A breakout and a downward retest of this level will boost a bull market, giving a new buy signal. The euro is likely to advance to the monthly high of 1.096. A more distant target will be the 1.1129 level where I recommend locking in profits.
If EUR/USD drops and bulls show no activity at 1.1030 in the afternoon, which is quite likely as even a slowdown in the economic expansion will facilitate risk sentiment, the pressure on the pair will only increase. Only a false breakout of the support level of 1.0998 will provide new entry points into long positions. You could buy EUR/USD at a bounce from the low of 1.0966, keeping in mind an upward intraday correction of 30-35 pips.
When to open short positions on EUR/USD:
Sellers tried to regain control during the European session. However, there are no big traders in the market now as trading volumes are rather low. The bears need to defend the resistance level of 1.1066. The euro failed to consolidate above this level in the morning. Market reaction to US data as well as a false breakout of this level could trigger a sell signal. The pair may drop to 1.1030. If it tumbles below this level and there is no upward retest, it could fall to 1.0998. A more distant target will be 1.0966, the low of last week. I recommend locking in profits at this level.
If EUR/USD grows during the US session and bears show no energy at 1.1066, which is also likely, I would advise you to postpone short positions until a false breakout of 1.096. At this level, there were profitable short positions on a rebound yesterday. You could sell EUR/USD at a bounce from 1.1129, keeping in mind a downward intraday correction of 30-35 pips.
COT report:
The COT report (Commitment of Traders) for April 11 logged a rise in long positions and a drop in short ones. The latest US economic reports signaled a gradual overheating of the labor market as well as a decline in retail sales. It is likely to ease inflationary pressure in the United States, allowing the Fed to end the tightening cycle. However, according to the meeting minutes for March, Fed policymakers are not planning to abandon aggressive tightening. At the May meeting, the regulator could raise the key rate by 0.25%. It will help the US dollar maintain its lead against the euro, trading below 1.1000. This week, there will be no crucial economic reports, excluding PMI data. So, the bears could facilitate the downward correction. The COT report showed that long non-commercial positions increased by 18,764 to 244,180, while short non-commercial positions declined by 1,181 to 80,842. At the end of the week, the total non-commercial net position amounted to 162,496 against 143,393. The weekly closing price fell to 1.0950 against 1.1.
Indicators' signals:
Trading is carried out above the 30 and 50 daily moving averages, which indicates bulls' attempts to take control of the market
Moving averages
Note: The period and prices of moving averages are considered by the author on the H1 (1-hour) chart and differ from the general definition of the classic daily moving averages on the daily D1 chart.
Bollinger Bands
If EUR/USD declines, the indicator's lower border at 1.1030 will serve as support.
Description of indicators
- Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked yellow on the chart.
- Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked 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 the short and long positions of non-commercial traders.
