When to open long positions on EUR/USD:
The EUR/USD pair resumed growth which was halted yesterday after the release of a strong US Consumer Confidence Index. Today, Christine Lagarde will deliver a speech. She will hardly say something new. The euro may face bearish pressure as investors are anticipating Germany's Consumer Confidence Index, the euro area money supply M3 as well as loans. The pair could decline to the support level of 1.0930.
For this reason, it is better to go long on the fall and a false breakout of 1.0930, which will give a new buy signal. The pair could return to 1.0974. A breakout and a downward retest of this level will boost demand for the euro. It may rise to a monthly high of 1.1010. A more distant target will be the 1.1060 level where I recommend locking in profits. If EUR/USD tumbles and bulls fail to protect 1.0930, the pressure on EUR/USD will increase. Therefore, only a false breakout of the support level of 1.0890 will provide new entry points into long positions. You could buy EUR/USD at a bounce from the low of 1.0846, keeping in mind an upward correction of 30-35 pips.
When to open short positions on EUR/USD:
Large sellers are unwilling to enter the market. They open new positions only after the release of macro stats. However, the economic calendar is empty today. In case of a strong bullish bias, I would open short positions only after the protection of the new resistance level of 1.0974, formed yesterday. A false breakout will give a sell signal that could push EUR/USD to 1.0930 where the moving averages benefiting bulls are passing slightly higher. A decline below this range as well as an upward retest may trigger a fall to 1.0890. A more distant target will be the low of 1.0846 where I recommend locking in profits. If EUR/USD rises during the European session and bears fail to defend 1.0974, which is likely, bulls will control the market. In this case, I would advise you to postpone short positions until a false breakout of the next resistance level of 1.1010. You could sell EUR/USD at a bounce from 1.1060, keeping in mind a downward intraday correction of 30-35 pips.
COT report
According to the COT report for June 13, there was a drop in long and short positions. However, this report was released before the Federal Reserve's decision on interest rates, which remained unchanged in June. This significantly influenced market sentiment. Therefore, one should not pay great attention to the current report. Demand for the euro remained high amid the ECB's aggressive tightening. In current conditions, buying on dips will be the best medium-term strategy. The COT report shows that non-commercial long positions decreased by 9,922 to 226,138, while non-commercial short positions fell by 3,323 to 74,316. As a result, the total non-commercial net position dropped to 151,822 from 158,224. The weekly closing price rose to 1.0794 from 1.0702.
Indicators' signals:
Trading is carried out above the 30 and 50 daily moving averages, which indicates a possible rise in the euro.
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 1.0950 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.
