To open long positions on EUR/USD, you need:
Yesterday, euro bulls were actively fighting for the 1.2000 level and managed to protect it, which resulted in generating a signal to buy the euro. Let's take a look at the 5 minute chart and see what happened. Given the low volatility of the market, I revisited the nearest support and resistance levels in the afternoon, which led to forming the 1.2000 area. In my forecast, I advised you to build on this when making decisions on entering the market. We could clearly see that forming a false breakout there results in creating a good point for buying the euro, afterwards the pair quickly recovered to daily highs in the area of 1.2042. The movement was around 35 points.
Today is a very important day from a fundamental point of view, since the European Central Bank meeting will take place. All decisions made may affect the euro's direction, which will allow the bulls to continue their upward trend - observed throughout this month. The initial task is to protect the new and important support level at 1.3025. Forming a false breakout there will result in creating a good entry point into long positions, counting on the long-term growth of EUR/USD to the area of this week's high at 1.2079, where I recommend taking profits. In case of a breakthrough and consolidation at this level, with a reverse test from top to bottom, one can count on continuing the upward trend to the resistance area of 1.2133. If we do not see much activity in the support area of 1.2025 during the European session, then I recommend holding back from long positions until the 1.1975 low has been updated, from where you can buy the euro immediately on a rebound, counting on an upward correction of 20-25 points within the day. The next big support is seen around 1.1924.
To open short positions on EUR/USD, you need:
Bears retreated from the market since the entire focus is currently on the European Central Bank meeting. I think there is no point in guessing how the market will react to certain statements of ECB President Christine Lagarde, but it is better to act on the basis of the current situation. The main task in the first half of the day is to break the support at 1.2025, a test of which from the bottom up will lead to creating a good signal to open short positions in continuing the downward trend towards the 1.1975 low. A similar breakthrough and test of this level will open a direct road to the next target in the 1.1924 area, where I recommend taking profits. Updating this level will lead to a complete reversal of the bull market seen earlier this week. In the event of a further upward correction during the European session, I recommend not to rush to sell: the optimal scenario for opening short positions is to form a false breakout in the resistance area of 1.2079, but you can only sell EUR/USD immediately to a rebound from a high like 1.2133, counting on a downward correction at 20-25 points within the day.
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.
Trading is carried out above 30 and 50 moving averages, which indicates the sideways nature of the market ahead of today's ECB meeting.
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 1.2055 will lead to a new wave of growth for the euro. Surpassing the lower border of the indicator around 1.2000 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.