To open long positions on EURUSD, you need to:
In my forecast for the first half of the day, I paid attention to the level of 1.1991 and recommended actions based on it. Let's look at the 5-minute chart and figure out what happened. The chart clearly shows how the gradual purchases of the euro led to a sharp breakout and the demolition of several stop orders of bears above the resistance of 1.1991, after which the pair flew far up on one candle, as there was a void above this level. The reverse test of 1.1991 did not take place, although I was counting on it, which did not allow entering the market in long positions. Sales from the level of 1.2047 are working out for a rebound, however, there is very little left before the breakdown of 1.2047.
Euro buyers did a great job for the first half of the day and now their target is a new resistance of 1.2047. Given that there are no fundamental statistics at all in the second half of the day, the bulls may drive the euro further up. The breakdown and test of the level of 1.2047 from top to bottom form another entry point into long positions with the prospect of reaching a new maximum of 1.2109, where I recommend taking the profits. A lot of sellers are concentrated in the area of this range, which is visible on the daily chart. In the scenario of the absence of bull activity in the resistance area of 1.2047, a downward correction of the pair is not excluded. In this case, it is possible to consider new long positions only after updating the support of 1.1991, where the formation of a false breakdown will lead to an excellent entry point for buying the euro. In the absence of buyers in this range, I recommend postponing long positions until the test of a larger minimum of 1.1946, from which you can buy the euro immediately on the rebound in the expectation of an upward correction of 15-20 points within the day.
To open short positions on EURUSD, you need to:
Sellers have so far managed to stop the upward trend of the pair in the area of 1.2047, and now all they need is the formation of a false breakout there. Only such a scenario will allow us to count on a stronger downward correction to the support area of 1.1991, where I recommend taking the profits. If the EUR/USD continues its growth in the second half of the day, I recommend waiting for the test of the next maximum of 1.2109 and sell the euro immediately on the rebound in the expectation of a downward correction of 15-20 points within the day. It is worth noting that during the US session, no fundamental statistics are released, which will allow the bulls to increase their long positions in continuation of the trend that was observed in the morning. Therefore, be very careful with sales.
Let me remind you that in the COT report (Commitment of Traders) for April 6, the indicators of long and short positions have undergone several changes – short positions have grown strongly, which indicates that the market remains under the control of euro sellers. Long positions continued to decline, which led to another drop in the positive delta. Last week was filled with several fundamental statistics, however, more attention was drawn to the meeting of the International Monetary Fund, at which several agreements were reached on the extension of the debt deferral program until the end of this year and an initiative was created to support the poor countries most affected by the coronavirus. Last week, a lot has been said about the bureaucratic delay in the implementation of the EU recovery fund, which so far limits the upward potential of the euro in the near future.
For this reason, in the medium term, the market remains on the side of sellers of risky assets, which may lead to further formation of a downward trend. Investors expect the United States to be the first to start raising interest rates, which makes the dollar more attractive. This week's inflation data may seriously affect the balance of power in the market in favor of dollar buyers. The first signs of the formation of a medium-term bullish trend will be possible only after the lifting of restrictions and the recovery of the eurozone services sector, which will strengthen the hope for an improvement in the economic outlook and return the EUR/USD to an upward trend. The COT report shows that long non-profit positions decreased from the level of 194,764 to the level of 192,230, while short non-profit positions increased from the level of 121,024 to the level of 124,708. As a result, the total non-profit net position again continued its decline and amounted to 67,522 against 73,739 a week earlier. But the weekly closing price rose to the level of 1.1816 against 1.1768 last week.
Signals of indicators:
Trading is conducted above 30 and 50 daily moving averages, which indicates that the euro will continue to grow in the short term.
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.
A break of the upper limit of the indicator in the area of 1.2047 will lead to a new wave of growth of the euro. In the case of a decline in the pair, the support will be provided by the average border in the area of 1.1991.
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.