To open long positions on EURUSD, you need to:
In the first half of the day, we could not wait to form an excellent signal to open long positions from the level of 1.2034. Let's take a look at the 5-minute chart and talk about what happened: good data on activity in the manufacturing and services sectors of the eurozone countries allowed euro buyers to regain control of the market. You can see how the bulls are breaking above 1.2034; however, the reverse test of this area did not take place, so I was forced to skip this movement. Now the focus is shifted to the new resistance of 1.2069, from which we will start.
Only a break and consolidation above the level of 1.2069, with its reverse test from top to bottom, form a signal to open new long positions in the expectation of continuing the upward trend in the resistance area of 1.2133, where I recommend taking the profits. The next target will be a maximum of 1.2180. However, everything will depend on the data on the US economy, which is also expected to be very good, which may support the dollar. Suppose the pressure on the euro returns during the US trading, and the pair falls to the support of 1.2034. In that case, it is possible to open long positions only if a false breakout is formed in this range, which forms a good entry point to buy with the main goal of returning to the level of 1.2069. In the scenario of the absence of bull activity in the area of 1.2034, I recommend postponing long positions until the update of the minimum of 1.1996, from where you can buy the euro immediately on the rebound with the aim of an upward correction of 20-25 points within the day. The next major support is seen in the 1.1944 area.
To open short positions on EURUSD, you need to:
Sellers failed to cope with the tasks set and missed the level of 1.2034, which they will aim to return in the second half of the day. However, for now, their main task is to protect the resistance of 1.2069. Only the formation of a false breakout will lead to the formation of a good entry point into short positions in the expectation of a decline in EUR/USD to the support of 1.2034. In the scenario of a lack of activity of sellers in the area of 1.2069: it is best to postpone sales until the update of a new local high in the area of 1.2133, based on a downward correction of 20-25 points within the day. An equally important task for sellers will be to return the level of 1.2034 under control, the test of which from the bottom up on the volume will lead to the formation of an excellent signal to open short positions in the expectation of a fall of the pair to the lower border of the side channel of 1.1996. A break of this level will open a direct path to a more distant goal in the area of 1.1944, where I recommend taking the profits. An update to this level will completely reverse the bull market seen earlier this week.
In the COT report (Commitment of Traders) for April 13, the indicators of long and short positions have undergone a number of changes – both short and long positions have decreased, which indicates a more cautious approach of traders to the market. It is important that long positions continued to decline but at a slower pace, which may signal the end of the bear market. Last week was full of not very good fundamental statistics on the euro area, which turned out to be either worse than economists' forecasts, or coincided with them, which limited the upward potential of the pair. However, talk that the European Central Bank is beginning to think about curtailing the bond repurchase program in the 3rd quarter of this year is forcing investors to look at risky assets, which will favorably affect the position of the European currency in the near future. Vaccination program in the EU countries is beginning to improve, allowing us to count on lifting restrictions and more active recovery of the eurozone services sector, which will provide hope for an improved economic outlook and return the EUR/USD to an upward trend. The COT report indicated that long non-profit positions declined from 192,230 to the level of 190,640.
In contrast, short non-profit positions declined from the level of 124,708 to the level of 123,789, indicating profit-taking on short positions and a more cautious bearish approach. As a result, the total non-profit net position continued its decline and amounted to 66,851 against 67,522 against a week earlier. But the weekly closing price rose significantly to the level of 1.1911 against 1.1816 against last week.
Signals of indicators:
Moving averages
Trading is above 30 and 50 daily moving averages, indicating that the bulls are trying to return to the market.
Note: The period and prices of the moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
Bollinger Bands
A break of the lower limit of the indicator in the area of 1.1996 will lead to a fall in the euro.
Description of indicators
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
- MACD indicator (Moving Average Convergence / Divergence - moving average convergence/divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
- Bollinger Bands (Bollinger Bands). Period 20
- Non-profit speculative traders, such as individual traders, hedge funds, and large institutions, use the futures market for speculative purposes and meet 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 is the difference between the short and long positions of non-commercial traders.
