To open long positions on EUR/USD, you need:
Trading was in a narrow side channel yesterday since the US market was closed. The bears attempted to continue the downward trend in the morning, however, good data on consumer confidence in Germany returned demand for EUR/USD, which resulted in forming a bullish momentum today in the Asian session. Commitment of Traders (COT) reports for May 19 recorded an increase in short positions, while long positions were partially reduced, indicating a slowdown in the bullish momentum observed since mid-April. Traders continue to build up short positions at the euro's convenient growth in the area of large levels, which recently has been the 10th figure. The report shows an increase in short non-profit positions from 93,840 to 95,194, while long non-profit positions decreased from 171,980 to 167,756. As a result, the positive non-profit net position also decreased and amounted to 72,562 against 78,140, which indicates an increase in interest in sales of risky assets at current prices. As for the intraday strategy, compared to yesterday, I did not revise the levels and decided to leave everything as it was. Bulls still need to defend support 1.0887, and forming false breakout there will be a signal to open long positions. Otherwise, I now recommend buying EUR/USD only for a rebound from a low of 1.0855. An equally important task for the bulls is to return EUR/USD to the resistance of 1.0928, which the pair gradually approached in the Asian session. Given that trading is slightly higher than the moving average, the bulls have a chance to return the market to their control, and it is from this level that the upward trend in the pair continues or not. Consolidating above this range, along with good data on the German economy, may lead to further growth of EUR/USD to the area of a high of 1.0966, and the target in the middle of the week will be the 1.1006 area, where I recommend taking profit.
To open short positions on EUR/USD, you need:
The bears made an attempt to consolidate below support at 1.0887 yesterday, but if you look at the 5-minute chart, confirmation of a breakout and a bottom-up level test on a good volume did not take place, which forced speculative players to retreat after good reports on the German economy. All that the bears need today is another consolidation below the support of 1.0887, which will lead to a further downward correction of EUR/USD in the area of lows 1.0855 and 1.0808, where I recommend taking profit. However, do not forget that regular data on the state of the German economy will be released today, which may contain sufficient positive figures, and cause the euro to strengthen in the morning. In this scenario, I advise you to postpone short positions until an update of resistance of 1.0928 with forming a false breakout there, which will be the first sell signal. In the absence of activity among bears at this level, it is best to wait for a test of a high of 1.0966 and sell the euro from there immediately for a rebound while expecting a correction of 30-40 points within the day.
Signals of indicators:
Moving averages
Trade is conducted above 30 and 50 moving averages, which indicates an attempt to return buyers to the euro market.
Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differs from the general definition of the classic daily moving averages on the daily chart D1.
Bollinger bands
A break of the upper border of the indicator in the region of 1.0920 will lead to a new upward momentum of the pair. A break of the lower border of the indicator in the area of 1.0887 will increase pressure on 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 traders are speculators, such as individual traders, hedge funds and large institutions that use the futures market for speculative purposes and meet certain requirements.
- Long nonprofit positions represent the total long open position of nonprofit traders.
- Short nonprofit positions represent the total short open position of nonprofit traders.
- The total non-profit net position is the difference between the short and long positions of non-profit traders.
