To open long positions on EUR/USD:
Considering today's volatility, as long as trading stays above 1.0799, we can expect a retest of the nearest resistance at 1.0836. In the second half of the day, apart from statements by FOMC members Bullard, Barkin, and Bostic, nothing is significant. We will unlikely hear anything new, so the upward correction for the pair may continue in the beginning.
I will consider long positions, as in the morning, only after a drop and the formation of a false breakout around the 1.0799 minimum. The cautious tone of the Federal Reserve will lead to the growth of EUR/USD and a return to the resistance area at 1.0836. A breakthrough and a top-down test of this range will strengthen demand, creating an additional entry point for building long positions with a target of around 1.0870. The ultimate target remains the area around 1.0903, where I will take profit. If bears attempt to remind themselves and there is no buying pressure at 1.0799 in the second half of the day, we can expect the development of a bearish trend. Therefore, only the formation of a false breakout around the next support level at 1.0762 will give a signal to buy the euro. I will open long positions on a rebound from the 1.0716 minimum with a target of a 30-35 pip upward correction within the day.
To open short positions on EUR/USD:
Sellers tried, but it didn't work out. In the event of a further upward correction after the speeches of FOMC representatives, defending the nearest resistance at 1.0836 will be the sellers' priority task. A false breakout at this level will give a sell signal capable of pushing the pair back toward 1.0799. Consolidation below this range and a reverse test from below to above will lead to a minimum of around 1.0762. The ultimate target will be the 1.0716 minimum, where profit will be taken.
If EUR/USD moves upward during the American session and there are no bears at 1.0836, buyers will likely attempt to reenter the market. In that case, I will postpone short positions until the 1.0870 level. Selling can also be done there, but only after an unsuccessful consolidation. I will open short positions on a rebound from the 1.0903 maximum with a 30-35 point downward correction target.
In the COT report (Commitment of Traders) for May 9, the increase in long positions continued, but short positions also rose. It is worth noting that this report already considers the significant changes in the market after the meetings of the Federal Reserve and the European Central Bank. As we can see, more and more buyers are willing to enter the market. However, the downward correction of the euro we observed last week would be a good reason to build long positions - we need some good fundamental reasons. Considering there are no important statistics this week, only a sufficient number of central bank representatives speaking, we can expect pressure to remain on the pair. The COT report indicates that non-commercial long positions increased by 13,503 to 260,335, while non-commercial short positions jumped by 7,570 to 80,913. The overall non-commercial net position increased to 179,422 compared to 173,489 a week earlier. The weekly closing price decreased to 1.0992 from 1.1031.
Indicator signals:
Moving Averages
Trading is slightly above the 30-day and 50-day moving averages, indicating a continuation of the upward correction.
Note: The author considers the period and prices of moving averages on the hourly chart (H1), which differ from the general definition of classical daily moving averages on the daily chart (D1).
Bollinger Bands
In the event of an increase, the upper boundary of the indicator around 1.0836 will act as resistance.
Description of indicators:
• Moving average (determines the current trend by smoothing out volatility and noise). Period 50. Marked in yellow on the chart.
• Moving average (determines the current trend by smoothing out volatility and noise). Period 30. Marked in green on the chart.
• MACD indicator (Moving Average Convergence/Divergence) - Fast EMA period 12, Slow EMA period 26, SMA period 9.
• Bollinger Bands - Period 20.
• Non-commercial traders - speculators such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting specific 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.
• The overall non-commercial net position is the difference between non-commercial traders' short and long positions.
