In my morning forecast, I paid attention to the 1.0869 level and planned to make decisions on entering the market from it. Let's take a look at the 5-minute chart and figure out what happened there. Growth to this level occurred, but it never reached the formation of a false breakdown there. Obviously, it is not possible to enter the sale from this level yet, so the whole denouement is postponed to the afternoon. At the same time, I did not revise the technical picture.
To open long positions on EURUSD, you need:
Unfortunately, in the afternoon, there is nothing but a speech by representatives of the Federal Reserve System again. How the market will react to speeches by Treasury Secretary Janet Yellen, FOMC members Christopher Waller and Rafael Bostic is a mystery. But one thing is certain: euro buyers will not have a quiet life during today's American session. If the bulls allow the sell scenario from 1.0869 to be realized, then the market can definitely turn around. For this reason, I will consider purchases after the decline and the formation of a false breakdown in the area of 1.0838, which will be a suitable option to enter with the expectation of another increase in the area of 1.0869. A breakout and a top-down update of this range after the speech of the Fed representatives will lead to a strengthening of the pair with a chance of a breakthrough to 1.0893 – week high. The farthest target will be a maximum of 1.0918, where I will record profits. If EUR/USD declines and there is no activity around 1.0838 in the afternoon, the pressure on the market will increase, which will lead to a larger drop in the pair to the 1.0805 area. I'm also going to enter there only after the formation of a false breakdown. I plan to open long positions immediately for a rebound from 1.0778 with the aim of an upward correction of 30-35 points within the day.
To open short positions on EURUSD, you need:
Sellers have every chance to keep the market in the side channel and to return the initiative. To do this, you need to show yourself in the resistance area of 1.0869 and return trading to this level. Together with the false breakdown and hawkish statements by the Fed representatives, we can count on short positions with the prospect of a decline in the euro and an update of support at 1.0838. A breakout and consolidation below this range, as well as a reverse bottom-up test, will give another selling point with the pair moving to the low of 1.0805, where I expect to see a more active manifestation of buyers. The farthest target will be a minimum of 1.0778, where I will record profits. In the event of an upward movement of EUR/USD in the afternoon, as well as the absence of bears at 1.0869, the development of the bullish trend will continue. In this case, I will postpone the sale until the test of the next resistance at 1.0893. I will also sell there, but only after an unsuccessful consolidation. I plan to open short positions immediately for a rebound from 1.0918 with the aim of a downward correction of 30-35 points.
The COT report (Commitment of Traders) for May 14 showed an increase in long positions and a reduction in short ones. It is obvious that recent statements by representatives of the European Central Bank regarding possible scenarios for lowering interest rates, as well as good figures indicating a continued slowdown in price pressure in the region, were interpreted in favor of buying risky assets. However, at the moment, lower rates may put pressure on the euro. However, now everyone is talking more about the need to restore the economy through its stimulation so that the growth of the euro, in the event of a softening of the cost of borrowing, will be ensured in the medium term. The COT report indicates that long non-profit positions increased by 7,804 to the level of 178,398, while short non-profit positions collapsed by 4,761 to the level of 161,243. As a result, the spread between long and short positions fell by 1,089.
Indicator signals:
Moving averages
Trading is conducted around the 30 and 50-day moving averages, indicating market uncertainty.
Note: The period and prices of the moving averages considered by the author are on the hourly H1 chart and differ from the general definition of classic daily moving averages on the D1 daily chart.
Bollinger Bands
In case of a decline, the lower boundary of the indicator around 1.0860, will act as support.
Indicator Descriptions:
- Moving Average: Identifies the current trend by smoothing volatility and noise. Period 50. Marked in yellow on the chart.
- Moving Average: Identifies 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 specific 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.
