To open long positions on EUR/USD, you need:
Yesterday, the bulls were actively fighting for the 1.2047 level, repeatedly trying to resume the upward trend from it. What resulted could be clearly seen on the chart. Let's take a look at the trades that were formed yesterday: in my morning forecast, I advised you to open long positions when a false breakout was formed in the 1.2047 area, which happened. However, to my regret, bulls started to act a bit earlier from the 1.2048 level, which was at odds with my trading system, so I missed this trade. After rising by 30 points, closer to the afternoon, the bears returned to the support area of 1.2047, and they only managed to surpass this level on the third attempt. Then, on the reverse test of 1.2047 from the bottom up, a good signal to enter short positions appeared, which resulted in a sell-off of the European currency by another 25 points. However, before moving down, the bulls pushed the pair above 1.2047 and moved up about 10 points, which caught my stop orders, so I got only losses from this trade.
Important fundamental reports from the eurozone will not be published today, so it is difficult to understand which direction the pair will choose next. Considering how the market has been reacting to recent reports, practically ignoring them, then I would not be surprised if the price drops further, especially ahead of tomorrow's European Central Bank meeting, during which quite important statements about the future of monetary and credit could be made. The initial challenge is to regain control of the 1.2047 level, which the bulls missed yesterday afternoon. Surpassing it and testing this level from top to bottom can result in creating a good signal for you to open long positions in order for the pair to recover so it can reach a new local high at 1.2109, where I recommend taking profits. The next target will be the 1.2180 level, but it will not be so easy to reach it. In case EUR/USD falls in the first half of the day, the main task is to protect support at 1.1991. Forming a false breakout in this area at the beginning of the European session can result in creating a signal to open long positions in order to continue the bullish trend. If bulls are not active in the 1.1991 support area: then it is better to hold back from long positions until the test of the larger 1.1946 area, from where you can buy EUR/USD immediately on a rebound, counting on an upward correction of 20-25 points within the day. The next support is seen around 1.1916.
To open short positions on EUR/USD, you need:
The bears coped with their task and regained control over support at 1.2047. The euro will remain under pressure as long as the pair remains below this level. Forming the next false breakout there in the first half of the day can create an entry point for short positions, which will increase the pressure on the pair and push it to the area of a low like 1.1991. The next target will be the 1.1946 area, where I recommend taking profits. The euro might be in demand during the European session since we will not receive important fundamental reports in the first half of the day. If the bears are not active at the 1.2047 level, then I recommend holding back from short positions until a new local high at 1.2109 has been renewed, from where you can sell EUR/USD immediately on a rebound, counting on a downward correction of 15-20 points within the day. The next major selling resistance is seen at 1.2180.
The Commitment of Traders (COT) report for April 13 revealed that the indicators of long and short positions underwent a number of changes - both of them decreased, which indicates that traders are being more cautious. Take note that long positions continued to decline, but at a slower pace, which may signal the end of the bear market. A lot of underwhelming fundamental reports from the eurozone last week, as they turned out to be either worse than economists' forecasts, or coincided with them, and this limits the pair's growth potential. However, talk that the European Central Bank is beginning to think about curtailing the bond repurchase program as early as the third quarter of this year makes investors look closely at risky assets, which will favorably affect the euro's position in the near future. The news that the vaccination program carried out in the EU countries is starting to yield results allows us to count on the lifting of restrictions and a more active recovery of the eurozone services sector, which will inspire hope for an improved economic outlook and return the EUR/USD to an upward trend.
The COT report indicated that long non-commercial positions fell from 192,230 to 190,640, while short non-commercial positions fell from 124,708 to 123,789, indicating profit taking on short positions and a more cautious approach from the bears. As a result, the total non-commercial net position continued to fall and hit 66,851 against 67,522 against a week earlier. But the weekly closing price significantly rose to 1.1911 against 1.1816 against last week.
Indicator signals:
Moving averages
Trading is carried out above 30 and 50 moving averages, which indicates the sideways nature of the market ahead of tomorrow's decision by the ECB.
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
Surpassing the upper border of the indicator in the area of 1.2060 will lead to a new wave of growth for the euro. Surpassing the lower border of the indicator around 1.2015 will increase the pressure on 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.
