To open long positions on EUR/USD, you need:
In yesterday's review, I talked a lot about the fact that if the Federal Reserve leaves interest rates unchanged, then the euro has every chance of growth. Let's take a look at the 5-minute chart and see what happened after it announced its decision. You could clearly see how the pair repeatedly went over the resistance at 1.2093, and this caused the euro to actively rise, however, it was not possible to enter long positions from there, since the reverse test of this level from top to bottom did not take place. All that we managed to do yesterday afternoon was to sell immediately on a rebound from the resistance of 1.2133. The first test of this level led to the expected downward correction by 20 points. No other signals were generated.
The technical picture of the pair has also significantly changed. Today will start with a series of fundamental reports on the labor market and inflation in Germany, where indicators will be below economists' forecasts, which will limit the pair's growth potential. Also, a report on the indicator of consumer confidence in the eurozone for April will be released during the European session, where the indicator may create some problems for the euro bulls, since the coronavirus pandemic and the next isolation measures have contributed to this.
The EUR/USD bulls need to think of a way to rise above the new resistance at 1.2151. A breakthrough and consolidation above this range with a reverse test from top to bottom generates a signal to open new long positions for the purpose of continuing the upward trend so it can reach a new monthly high like 1.2197, where I recommend taking profits. The next target will be the 1.2240 level, but we can only get to it after the speeches of the European Central Bank representatives, as well as following the release of the report on the US economy's growth rate in the first quarter of this year. If the bulls are not active in the first half of the day, then we can expect EUR/USD to sharply fall. In this case, I recommend opening long positions only if a false breakout is formed in the 1.2105 area, where the moving averages are, playing on the bulls' side. If the bulls are not active, and at a low like 1.2105 in particular, then it is best to hold back from long positions until the new lower boundary of the weekly horizontal channel near 1.2060 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.
To open short positions on EUR/USD, you need:
The bears missed their chance and all that remains is for them to protect the nearest resistance levels. The main task in the first half of the day is to form a false breakout in the resistance area of 1.2151, since this scenario creates a good signal to open short positions as we count on a larger downward correction to the support area of 1.2105. Surpassing this level is also an important task. A reverse test of the level from the bottom up can create a new entry point into short positions for the purpose of reaching a low like 1.2060, where I recommend taking profits. If the bears are not active in the 1.2151 area, and the bulls manage to take this range for themselves, then it is best to refuse to sell until EUR/USD reaches a new local high in the 1.2197 area. You can also sell the euro on a rebound from the 1.2239 level, counting on a downward correction of 20-25 points within the day.
The Commitment of Traders (COT) report for April 20 showed that the indicators of long and short positions significantly changed - short positions decreased, and long positions sharply increased, which indicates that players have been actively buying the euro. The news that the vaccination program in the European Union is finally bearing fruit has supported the euro, as well as the fact that large eurozone countries will begin to more actively withdraw from quarantine in the near future. The European Central Bank's decisions on monetary policy did not significantly affect the euro's rate, since there weren't any changes, as well as talks on the part of the ECB administration about the high rate of the euro.
The COT report indicated that long non-commercial positions sharply grew from 190,640 to 197,137, while short non-commercial positions fell from 123,789 to 116,329, indicating an influx of new buyers with expectations that the euro would continue rising. Therefore, it is not surprising that any calculation for a downward correction for the pair in the short term has failed in the past week. As a result, the total non-commercial net position sharply rose from 66,851 to 80,808 a week earlier. The weekly closing price continued to rise to 1.2042 versus 1.1911 last week.
Trading is carried out above 30 and 50 moving averages, which indicates a resumption of the bull market.
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 1.2160 will lead to a new wave of growth for the euro. In case the pair falls, support will be provided by the lower border of the indicator in the area of 1.2060.
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.