In my morning forecast, I focused on the level of 1.0829 and planned to make market entry decisions based on it. Let's review the 5-minute chart to see what happened. A decline and a false breakout at this level provided an entry point for long positions on the euro, which led to a rise in the pair to around 1.0855. From this level, I opened short positions after a similar unsuccessful consolidation, resulting in a 10-point correction of the pair. The technical picture for the second half of the day has remained almost unchanged.
For Opening Long Positions on EURUSD:
The euro reacted with another decline to weak IFO indices from Germany but then quickly recovered, indicating a nervous market state ahead of the important report related to the US economy. We are awaiting GDP figures for the second quarter, with growth projected compared to the first quarter, and figures on the Personal Consumption Expenditure (PCE) index, which could lead to quite a significant market movement. Today's numbers on initial jobless claims and durable goods orders are unlikely to be influential. In the statistics are weak, I prefer to act only after a false breakout around the support of 1.0829, formed based on yesterday's results. This would provide an excellent entry point for buying, with a correction target around 1.0855, where the moving averages favor sellers. A breakout and upward movement beyond this range would strengthen the pair with a chance to rise to around 1.0874. The furthest target will be the maximum of 1.0896, where I will take profit. If EUR/USD declines and shows no activity around 1.0829 in the second half of the day, sellers will continue their active actions, targeting further euro declines. In this case, I will enter the market only after a false breakout around the next support of 1.0808. I plan to open long positions immediately on a rebound from 1.0785 with a target of a 30-35 point intraday upward correction.
For Opening Short Positions on EURUSD:
Sellers remain active, and strong US statistics, particularly concerning GDP, should support their efforts. Currently, the best approach is to sell on a rise after a false breakout around the resistance of 1.0855, where the moving averages favor the bears. This would be an ideal scenario for entering short positions to continue the downward trend and target the support at 1.0829. However, a breakout and consolidation below this range will only occur with strong GDP data. A reverse test from bottom to top will offer another selling point with movement toward the minimum of 1.0808, where I expect more active euro buyers. The furthest target will be around 1.0785, where I will take profit. Testing this level will signal the establishment of a bearish market. If EUR/USD moves up in the second half of the day and bears are absent at 1.0855, buyers may regain initiative. In this case, I will delay selling until the next resistance test at 1.0874, where I will also sell, but only after a failed consolidation. I plan to open short positions immediately on a rebound from 1.0896, targeting for a 30-35 point downward correction.
In the COT report (Commitment of Traders) for July 16th, there was a reduction in short positions and an increase in long positions. Discussions about potential US rate cuts and the pause planned by the European Central Bank fueled demand for risky assets, including the euro, helping the market rise. However, after the crucial data was published and the decision to keep rates unchanged following the ECB meeting was made, the market stabilized. This calm is expected to continue until the end of the month. Only GDP data might cause a spike in volatility. Therefore, it is best to stick to cautious trading within the channel. The COT report indicated that long non-commercial positions increased by 14,108 to 179,937, while short non-commercial positions fell by 7,018 to 155,188. As a result, the gap between long and short positions narrowed by 1,101.
Indicator Signals:
Moving Averages
Trading is conducted below the 30 and 50-day moving averages, indicating a decline in the euro.
Note: The period and prices of the 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 decline, the lower boundary of the indicator, around 1.0829, will act as support.
Indicator Descriptions:
- Moving average (MA): A moving average determines the current trend by smoothing volatility and noise. Period 50. Marked in yellow on the chart.
- Moving average (MA): A moving average determines the current trend by smoothing volatility and noise. Period 30. Marked in green on the chart.
- MACD (Moving Average Convergence/Divergence): Quick 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 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: The difference between non-commercial traders' short and long positions.
