In my morning forecast, I noted the level of 1.0776 and planned to make decisions on market entry based on it. Let's look at the 5-minute chart and analyze what happened there. Growth occurred, but due to low volatility, we only reached it once testing this range. Consequently, suitable entry points into the market still needed to be achieved. The technical picture for the second half of the day remained unchanged.
For opening long positions on EURUSD, the following is required:
The absence of significant Eurozone statistics became the key point of low trading volume and weak pair volatility. Even though retail sales volume in the Eurozone in March of this year exceeded economists' forecasts, it didn't particularly help the euro. I detailed the reasons for this in the morning forecast. The fact that we only have data on the RCM/TIPP Economic Optimism Index and consumer credit volume ahead of us likely means that volatility will remain the same. However, pressure on the euro may increase, given that risk asset buyers did not manifest themselves in the first half of the day. I plan to act according to the morning scenario: only the formation of a false breakout around 1.0741 will give an entry point into long positions capable of pushing the euro towards the significant resistance zone at 1.0776, which we did not reach today. Breaking and updating this range from top to bottom will lead to the formation of a new bullish market and a signal to buy with a chance of a surge to 1.0812. The ultimate target will be at a maximum of 1.0850, where I will take profit. In the case of a decrease in EUR/USD and the absence of activity around 1.0741 against the backdrop of very strong US statistics, pressure on the euro within the medium-term bearish trend will return. In such a scenario, I will enter the market only after the formation of a false breakout around the next support at 1.0706. I plan to open long positions immediately on the rebound from 1.0677, with a target of an upward correction within the day by 30-35 points.
For opening short positions on EURUSD, the following is required:
Euro sellers also have all the chances for the pair to fall. But first, I would like to see their activity around the significant resistance at 1.0776. The formation of a false breakout would be an excellent scenario for entering short positions with the target of declining to around 1.0741. Breaking and holding below this range, along with a reverse test from bottom to top, will provide another selling point with the pair moving towards 1.0706. There, I expect more active involvement from large buyers. The ultimate target will be at a minimum of 1.0677, where I will take profit. In the case of upward movement of EUR/USD in the second half of the day, as well as the absence of bears at 1.0776, bears will bid farewell in hopes of returning the market under their control. In this case, I will postpone sales until testing the next resistance at 1.0812 - the weekly maximum. I will also sell there, but only after an unsuccessful consolidation. I plan to open short positions immediately on the rebound from 1.0850 with a target of a downward correction by 30-35 points.
In the COT report (Commitment of Traders) for April 30th, there was a reduction in long and short positions. The Federal Reserve meeting could be interpreted in two ways, so significant changes in the market did not occur. Some have a chance that the Fed will still start lowering rates this year, just as some continue to buy the dollar, betting on a longer period of high interest rates. The data released on the US labor market last week still need to be reflected in this COT report, so we need the complete picture. However, despite this, I expect a further decline in the pair within the observed medium-term trend. The COT report indicates that long non-commercial positions fell by 111 to 167,185, while short non-commercial positions collapsed by 3,323 to 173,962. As a result, the spread between long and short positions increased by 618.
Indicator signals:
Moving averages
Trading is conducted below the 30 and 50-day moving averages, indicating further decline in the pair.
Note: The period and prices of moving averages considered by the author are on the H1 hourly chart and differ from the general definition of classical daily moving averages on the D1 daily chart.
Bollinger Bands
In case of a decrease, the lower boundary of the indicator, around 1.0760, will act as support.
Description of indicators
- Moving average (determines the current trend by smoothing volatility and noise). Period 50. Marked in yellow on the chart.
- Moving average (determines the current trend by smoothing 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 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 positions of non-commercial traders.
- The total non-commercial net position is the difference between the short and long positions of non-commercial traders.
