FX.co ★ EUR/USD: plan for the US session on April 20 (analysis of morning trades)

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 1.2047 and recommended to act based on it. Let's look at the 5-minute chart and figure out the entry points. I recommended opening long positions when forming a false breakout in the area of 1.2047, which happened. However, to my regret, buyers started to act a little earlier from the level of 1.2048, which went against my trading system. After a 30-point rise, the bears returned to the support area of 1.2047 again in the afternoon.

Given that in the second half of the day there are no fundamental statistics at all, the market may remain under the supervision of sellers. The initial task of the bulls is now to regain control over the level of 1.2047. Only its top-down test forms an entry point into long positions with the prospect of reaching a new high of 1.2109, where I recommend taking the profits. A more distant target is the resistance of 1.2180, in the area of which a lot of sellers will be concentrated, which will limit the upward potential of the pair. In the scenario of the absence of bull activity in the resistance area of 1.2047, the continuation of the 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 and 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 and brought the level of 1.2047 back under control. Only its test from the bottom up will lead to the formation of a good entry point into short positions with the aim of a downward correction to the support area of 1.1991, where I recommend taking the profits. The next support is seen in the range of 1.1946. If the buyers of EUR/USD regain control of the resistance of 1.2047 in the second half of the day and the active actions of the bears will not be noticeable near this range: I recommend postponing short positions until the test of the next maximum of 1.2109 and sell the euro immediately for a 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 may weaken the position of euro sellers since the trend is still upward. Therefore, be very careful with sales from the level of 1.2047 and do not forget about stop orders.

Let me remind you that in the COT report (Commitment of Traders) for April 13, the indicators of long and short positions have undergone a number of changes – both short and long positions have decreased, which indicates a more cautious approach of traders to the market. Long positions continued to decline, but at a slower pace, which may signal the end of the bear market. Last week was full of not very good fundamental statistics on the euro area, which turned out to be either worse than economists' forecasts, or coincided with them, which limited the upward potential of the pair. However, talk that the European Central Bank is beginning to think about curtailing the bond repurchase program in the 3rd quarter of this year is forcing investors to look at risky assets, which will favorably affect the position of the European currency in the near future. The news that the vaccination program in the EU countries is beginning to give its result allows us to count on the lifting of restrictions and more active recovery of the eurozone services sector, which will give hope for an improved economic outlook and return the EUR/USD to an upward trend. The COT report indicated that long non-profit positions declined from the level of 192,230 to the level of 190,640, while short non-profit positions declined from the level of 124,708 to the level of 123,789, indicating profit-taking on short positions and a more cautious bearish approach. As a result, the total non-profit net position continued its decline and amounted to 66,851 against 67,522 against a week earlier. But the weekly closing price rose significantly to the level of 1.1911 against 1.1816 against last week.

Signals of indicators:

Moving averages

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.

Bollinger Bands

The growth will be limited near the upper limit of the indicator in the area of 1.2080. A break of the lower limit of the indicator in the area of 1.2025 will lead to a new fall in 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 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.