Yesterday, several entry signals were made. Let's look at the 5-minute chart to get a picture of what happened. Previously, I considered entering the market from the 1.0944 level. A false breakout through the mark created a buy entry point but no growth followed, and I took a loss. In the second half of the day, a false breakout through 1.0944 produced a sell entry point, and the price dropped by over 40 pips.
When to open long positions on EUR/USD:
Yesterday, data on the US PPI was delivered. It turned out figures had decreased at a slower-than-expected pace. The greenback advanced on hopes of further rate hikes from the US Federal Reserve. However, the euro has fallen steeply this week. So, the bulls may get more active near weekly lows today. Reports on consumer prices in France and Germany as well as a speech of the ECB Nagel are on the agenda today..
I will sell on a correction from 1.0911 support. A false breakout there will create a buy entry point with the target at 1.0944 resistance, which is in line with bearish moving averages. In fact, the euro was sold once from this mark yesterday. A breakout and a downside test of this range after the ECB representative's speech will produce an additional buy entry point with the target at a high of 1.0971. The most distant target is seen at 1.09998, where I will lock in profit.
If EUR/USD goes down and there is no bullish activity at 1.0911, which is highly likely due to the bear market, we will see a new trend begin. A false breakout through 1.0878 support will make a signal to buy the euro. I will buy immediately on a bounce from a low of 1.0834, allowing a correction of 30-35 pips intraday.
When to open short positions on EUR/USD:
The bears are in control of the market. However, they may lose their grip today. That is why it is so important to sell cautiously at weekly lows. The bears should protect 1.0944 resistance, which is in line with the moving averages. A false breakout will make a sell signal. The target stands at 1.0911. In case of consolidation below the range and an upside retest, the price will head toward 1.0878. The most distant target is seen at a low of 1.0834, where I will lock in profits.
If EUR/USD goes up in the European session and there is no bearish activity at 1.0944, the bulls will attempt to return to the market. I will open short positions at 1.0971 after a failed consolidation. I will also sell immediately on a bounce from a high of 1.0998, allowing a downward correction of 30-35 pips.
The COT report for May 2 logged an increase in long positions and a decrease in short positions. This report does not yet account for significant changes that took place in the market after the Federal Reserve and European Central Bank meetings last week. So, traders should not focus on it too much. Both central banks raised rates by 0.25%, maintaining market balance while allowing risk asset bulls to expect further growth. There is no important data this week. So, traders can relax a bit. According to the COT report, non-commercial long positions grew by 3,316 to 246,832, and non-commercial short positions dropped by 773 to 73,343. As a result, the overall non-commercial net position increased to 173,489 from 144,956, recorded a week before. The weekly closing price dropped to 1.1031 from 1.1039.
Indicators' signals:
Moving averages:
Trading is carried out in the area of the 30-day and 50-day moving averages, which indicates a bearish continuation.
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
Support stands at 1.0905, in line with the lower band.
Description of indicators
- Moving average (MA) determines the current trend by smoothing volatility and noise. Period 50. Colored yellow on the chart.
- Moving average (MA) determines the current trend by smoothing volatility and noise. Period 30. Colored green on the chart.
- Moving Average Convergence/Divergence (MACD). Fast EMA 12. Slow EMA 26. SMA 9.
- Bollinger Bands. Period 20
- Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements.
- Long non-commercial positions are the total long position of non-commercial traders.
- Non-commercial short positions are the total short position of non-commercial traders.
- Total non-commercial net position is the difference between the short and long positions of non-commercial traders.
