To open long positions on EUR/USD, you need:
Yesterday, the European currency was falling all day. The reasons are clear: problems with the EU stabilization fund and a slow vaccination program do not leave the European economy a chance for a sharp growth this year. But we are more interested in the technical side and trade deals. Let's take a look at the 5-minute chart: I paid attention to the 1.1760 level in the morning and advised you to act based on it. The bears managed to surpass this range without any problems, afterwards there was a small upward correction to this level. Unfortunately, we failed to wait for the 1.1760 level to be tested from the bottom up, and after a slight increase in pressure on the euro, it immediately returned, which led to another sell-off for the pair. I missed the signal to open short positions since the 1.1760 level was not tested from the bottom up. In the afternoon, I advised you to open long positions on the rebound from support at 1.1714, which happened. You can clearly see that after this level was initially tested, an upward correction by 20 points had occurred, afterwards the euro was under pressure again.
Quite a lot of fundamental statistics today - from data on the labor market in Germany to reports on inflation in Italy, France and the eurozone. However, bulls can hardly rely on them. Good reports from yesterday failed to stop the bearish trend, and most likely the picture will repeat itself today. Bad data - on the contrary, will lead to a large downward movement for the euro. EUR/USD bulls urgently need to take action in order to regain control of the 1.1714 level, which they missed in today's Asian session. Pushing the pair to settle on this range and testing it from top to bottom creates a good signal to open long positions in hopes of an upward correction to the 1.1753 area, where I recommend taking profits. Moving averages that play on the sellers' side also pass there. Surpassing 1.1753 will strengthen the upward correction in the area of the 1.1796 high. In case the euro is still under pressure and we receive weak reports on the eurozone countries, then it would be best to postpone short positions until the next support at 1.1682 has been tested. However, you can buy the euro there only if a false breakout is formed. I recommend opening long positions immediately on a rebound from the low of 1.1643, counting on an upward correction of 15-20 points within the day.
To open short positions on EUR/USD, you need:
Sellers are still in control of the market even despite an oversold that has formed on many indicators. The bears have already surpassed the 1.1714 level during the Asian session and all they have to do is form a false breakout there at the beginning of the European session. This will be an excellent signal in continuing the downward trend for the purpose of entering new lows in the 1.1682 and 1.1643 areas, where I recommend taking profits. If the report on the eurozone economy manages to surprise traders, it is possible that the pair will return to resistance at 1.1714. In this case, I recommend not to rush with short positions: the optimal scenario would be to update the 1.1753 area, from where you can sell the euro immediately on a rebound, counting on a downward movement of 15-20 points within the day. Moving averages that play on the side of the bears also pass there. If traders are not active in this level then you can open short positions immediately on the rebound from a high like 1.1796.
The Commitment of Traders (COT) report for March 23 shows that the indicators of long and short positions remained practically unchanged, which indicates a clear lack of willingness to buy euros in the short term. The delta growth was due to a slight decline in short positions, and not because of an influx of new buyers. Traders are now entirely focused on the problems with the EU vaccination program and bureaucratic delays in the implementation of the Recovery Fund - they will be the main reason for the weak growth of the eurozone economy after the Covid-19 pandemic this year, making it lag behind other developed countries. This is reflected in the euro's rate, which continues to lose its positions against the US dollar. For this reason, the market remains on the side of sellers of risky assets, which may lead to forming a succeeding downward trend.
The dollar's position will only strengthen in the event of another round of growth in the yield of ten-year US bonds. Investors expect the United States to be the first to start raising interest rates, which makes the dollar more attractive. At the moment, it is best not to rush into buying euros, but to wait for lower prices. Another factor of medium-term pressure on the euro is the fact that many European countries are in quarantine due to the coronavirus. The recent rollback of social distancing measures has led to new outbreaks of disease in the population, forcing many governments to revert to previous measures. One can expect an improvement in the economic outlook for the eurozone only when restrictions are lifted and the service sector is restored, which will return the medium-term trend of strengthening EUR/USD. The COT report indicated that long non-commercial positions fell to 195,500 from 195,857, while short non-commercial positions fell further from 105,881 to 102,178. As a result, the total non-commercial net position broke its five-week downward trend and slightly rose from 89,976 to 93,332. The weekly closing price was 1.1932 against 1.1926 a week earlier.
Indicator signals:
Moving averages
Trading is carried out above 30 and 50 moving averages, which indicates a continuation of the downtrend for the euro.
Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differs from the general definition of the classic daily moving averages on the daily D1 chart.
Bollinger Bands
If the euro grows in the first half of the day, the upper border of the indicator in the area of 1.1708 will increase pressure on the euro. A breakout of the upper border of the indicator in the 1.1750 area will lead to an upward correction of the pair.
Description of indicators
- Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
- Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in 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 short and long positions of non-commercial traders.
