To open long positions on EUR/USD, you need:
Yesterday only one signal to enter the market was formed, and it appeared in the first half of the day. Let's look at the 5-minute chart and analyze the entry point: you can clearly see how gradual purchases of the euro led to a sharp breakout and removed a series of the bears' stop orders above resistance at 1.1991, afterwards the pair flew far up on one candlestick, since there was a void above this level. The reverse test of 1.1991 did not take place, although I was counting on it, and so I did not enter long positions. Selling from the 1.2047 level turned out to be quite profitable, as the correction from this reached around 30 points.
Before talking about the prospects for the EUR/USD movement, let's see what happened in the futures market and how the Commitment of Traders (COT) positions have changed. The 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.
Today the market will not please us with versatile fundamental reports, so it is possible that the upward movement will continue in the first half of the day. We can watch the bulls try to push the upward trend as long as the pair is trading above the 1.2047 level. Forming a false breakout at this level will be another proof that there is a large buyer in the market. The nearest target of the bulls will be the 1.2109 high, where I recommend taking profits, but a more distant resistance level is seen in the 1.2180 range, which the bulls will strive for. If new buyers don't support the euro's upward movement in the first half of the day, then it would be best not to rush to buy, but instead you should wait for EUR/USD to fall and form a false breakout in the 1.1991 support area, where the moving averages pass, playing on the side of the bulls. If traders are not active at this level, then I recommend holding back from long positions in EUR/USD until support at 1.1946 has been tested, from where you can buy the pair immediately on a rebound, counting on an upward correction of 20-25 points within the day.
To open short positions on EUR/USD, you need:
The bears need to think of a way to return to the 1.2047 level, as their plans for a downward correction depend on it. Falling below 1.2047 and testing it from the bottom up will result in creating a signal for opening short positions in order to return to the support area of 1.1991, where I recommend taking profits. A serious struggle will begin for this level, as it can determine if the euro's upward trend would go even further. A breakthrough and consolidation below this range with a reverse test from the bottom up can create another good entry point for short positions, in hopes of returning EUR/USD to the 1.1946 low, where I recommend taking profits. The next target will be support at 1.1916, but this is something of a fantasy. If EUR/USD continues to grow, then it is best to postpone short positions until a new large high like 1.2109 has been renewed, from where you can open short positions if a false breakout is formed. I recommend selling the euro immediately on a rebound after testing the new local resistance at 1.2180, counting on a downward correction of 15-20 points within the day.
Trading is carried out above 30 and 50 moving averages, which indicates that the euro will continue to rise in the short term.
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.
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.