To open long positions on EURUSD, you need to:
In my morning forecast, I paid attention to the level of 1.2149 and recommended that you decide on entering the market from it. Let's look at the 5-minute chart and talk about what happened and what should have been done. Buyers achieved a breakdown of the resistance of 1.2149. However, the expected reverse test from top to bottom did not occur. Thus, I was forced to skip the entry point. I noted on the chart the scenario in which it was possible to enter long positions. The growth was due to record data on the growth of the index of business sentiment from the ZEW institute for the eurozone. The indicator increased to a record 84 points, seriously exceeding the forecasts of economists.
In the second half of the day, the bulls need to focus on the level of 1.2149. As long as trading is above this range, demand for the euro will continue. In the case of a decline in the pair in the second half of the day, a false breakout will form a good entry point into long positions to continue the bullish trend. An equally important task for buyers is to break through the resistance of 1.2177, which we have not yet reached in the first half of the day. You can open long positions only after a breakout and a test of this level from top to bottom. A confirmed breakout of 1.2177 will open a direct road to the highs of 1.2235 and 1.2294, where I recommend taking the profits. In the scenario of no bull activity around 1.2149 and good fundamentals for the US economy in the second half of the day, it is best to postpone long positions until the update of the support of 1.2105. The bulls have unique plans. You can buy the euro immediately for a rebound in the expectation of an upward correction of 15-20 points within the day.
To open short positions on EURUSD, you need to:
The bears failed to cling to the resistance of 1.2149, and this is not surprising, given what fundamental statistics came out in the first half of the day. Buyers are looking for any reason to build up long positions. Therefore, only the formation of a false breakout in the area of 1.2177 will form a signal to open short positions, pushing EUR/USD into the support area of 1.2149. Strong fundamental data on the small business optimism indicator from the NFIB and the level of vacancies and labor turnover from the US Bureau of Labor Statistics may increase the pressure on the pair. A break and a test of the level of 1.2149 from the bottom up will lead to the formation of a signal to open new short positions already to return to the minimum of 1.2105, where I recommend fixing the profits. Suppose the growth of the euro continues in the second half of the day, and we will not see any bear activity. In that case, I recommend postponing short positions until the update of resistance 1.2235 or sell the euro immediately to rebound even further – from the maximum of 1.2294 in the expectation of a downward correction of 15-20 points within the day.
Let me remind you that the COT report (Commitment of Traders) for May 4 showed an increase in both short and long positions, but now there were more buyers, which led to an increase in the overall non-commercial position. Last week, everyone was waiting for data on the US labor market and expected the continued growth of risky assets, which happened. Therefore, the growth of long positions outweighed short ones. The poor data once again proves that the Fed will continue to stay on course even despite the sharp economic jump. Such a strategy will keep the US dollar pressure and allow us to increase further long positions in risky assets, which will push EUR/USD up. The COT report shows that long non-profit positions jumped from the level of 200,415 to the level of 206,472, while short non-profit positions rose from 119,448 to the level of 121,643. It indicates an influx of new buyers in the expectation of continued growth of the euro, but with each update of the maximum, there are more and more willing to sell. The more the euro shows growth this month, the stronger the influx of new sellers will be since no one has canceled changes in the Fed's monetary policy this year. The total non-profit net position increased from 80,967 to 84,829. The weekly closing price, on the contrary, fell from the level of 1.20795 to the level of 1.20591.
Signals of indicators:
Moving averages
Trading is conducted just above 30 and 50 daily moving averages, which indicates that the market remains under the control of buyers.
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 upper limit of the indicator in the area of 1.2170 will lead to a new wave of euro growth. A break of the lower limit of the indicator in the area of 1.2220 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. 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 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 the short and long positions of non-commercial traders.
