FX.co ★ EUR/USD: trading plan for the US session on May 14th (analysis of morning deals). The euro managed to return to growth after the German data

In my morning forecast, I paid attention to the 1.0778 level and planned to decide to enter the market from it. Let's look at the 5-minute chart and figure out what happened there. The decline and the formation of a false breakdown there gave an excellent entry point into long positions, which resulted in an increase in the pair by more than 20 points, and this is a large part of today's market volatility. Since trading remained within the side channel, the technical picture was not revised for the second half of the day.

To open long positions on EURUSD, you need:

Good data on Germany and ZEW indices provoked euro purchases in the first half of the day, but whether the bulls can break above the weekly high is a rather difficult question. Ahead of us is the US producer price index, which excludes food and energy prices, which is more important. Do not forget about the speech of the Chairman of the Board of Governors of the Federal Reserve, Jerome Powell, whose tough stance on inflation and uncertainty on rates can provoke a sharp decline in the European currency and the strengthening of the US dollar. Considering that we have not gone beyond the side channel, I will act according to the plan of the first half of the day: I plan to buy euros as low as possible, relying more on the support of 1.0778, where the moving averages playing on the side of the bulls are located above. By analogy with what I discussed above, the formation of a false breakdown at this level will be a suitable option for entering the market with the expectation of an upward movement to the 1.0805 area. But a breakout and a top-down update of this range against the background of the Fed's soft position will lead to a strengthening of the pair with a chance of a breakthrough to 1.0832, which will allow the upward trend to continue with an exit above the upper limit of the side channel. The farthest target will be the 1.0857 area, where I will record profits. With the option of a decrease in EUR/USD and a lack of activity around 1.0778 in the afternoon, market equilibrium will return. In this case, I will enter only after the formation of a false breakdown in the area of the next support of 1.0753. I will open long positions immediately for a rebound from 1.0726 with the aim of an upward correction of 30-35 points within the day.

To open short positions on EURUSD, you need:

The sellers tried, but it turned out rather poorly. Before entering short positions today, I want to see them in their presence in the resistance area of 1.0805, where the pair is heading now. A false breakdown from the Fed's tight positions and rising producer prices would be a suitable scenario for opening short positions with the prospect of a decline in the euro and a re-update of support at 1.0778. A breakout and consolidation below this range and this level has already been worked out once today, as well as a reverse bottom-up test, will give another selling point with the pair moving to the area of the 1.0753 minimum. The farthest target will be a minimum of 1.0726, where I will record profits. A test of this level will indicate that the pair is locked in the side channel. In case of an upward movement of EUR/USD in the afternoon and the absence of bears at 1.0805, the bulls get a chance for a further upward trend. In this case, I will postpone sales until the test of the next resistance of 1.0832. I will also sell there, but only after an unsuccessful consolidation. I plan to open short positions immediately for a rebound from 1.0857 with the aim of a downward correction of 30-35 points.

The COT report (Commitment of Traders) for May 7 showed a reduction in short positions and an increase in long ones. All this suggests that the demand for risky assets remains rather weak after the meetings of central banks. The fact that the number of long and short positions is almost equal indicates no advantage for either side, which the graph confirms. Now, traders will wait for new statistics and benchmarks, but trading will continue in the side channel, with a slight advantage for buyers of risky assets. The COT report indicates that long non-profit positions increased by 3,409 to 170,594, while short non-profit positions fell by 7,958 to 166,004. As a result, the spread between long and short positions increased by 2,295.

Indicator Signals:

Moving Averages

Trading is conducted above the 30 and 50-day moving averages, indicating further pair growth.

Note: The author considers the period and prices of moving averages on the hourly chart H1, which differs from the general definition of classic daily moving averages on the daily chart D1.

Bollinger Bands

In case of a decline, the lower boundary of the indicator, around 1.0778, 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, 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 positions of non-commercial traders.
• The total non-commercial net position differs between non-commercial traders' short and long positions.