To open long positions on EURUSD, you need to:
As expected, the data on the eurozone put pressure on the European currency in the first half of the day. However, the pair's growth potential remains at a fairly high level. If you look at today's 5-minute chart, you will see how the euro has declined against the US dollar. However, the pair has not tested the levels I indicated this morning. Accordingly, there were no signals for entering the market. All the focus is placed on the second half of the day and the report on the US economy for the 1st quarter of this year.
Buyers of the European currency need to think about breaking above the resistance of 1.2147 (revised level from 1.2151). Only a break and consolidation above this range with a reverse test from top to bottom forms a signal to open new long positions in the expectation of continuing the upward trend in the area of a new monthly high of 1.2197, where I recommend taking the profits. The next target will be the level of 1.2240. However, we will recover it only after the data on the US economy, which should be better than the forecasts of economists. A strong GDP report will bring back buyers, which will allow the upward trend to continue. An important point is the protection of the new support level of 1.2111, which is revised from 1.2105. Only the formation of a false breakout will strengthen buyers' confidence in the strength of the market and lead to the formation of a good entry point into long positions. In the scenario of no bull activity and at the low of 1.2111, it is best to postpone long positions until the new lower limit of the weekly side channel is updated in the area of 1.2070, from where you can buy the euro immediately on the rebound with the aim of an upward correction of 20-25 points within the day.
To open short positions on EURUSD, you need to:
Unimpressive data on the German labor market and the consumer confidence indicator in the eurozone forced the bears to show themselves in the market, which led to a decline in the pair. Their main task for sellers in the second half of the day is to break through the support of 1.2111. Only the reverse test of this level from the bottom up will form an entry point into short positions to reach the minimum of 1.2070, where I recommend fixing the profits. The longer-range target is a minimum of 1.1998. In the EUR/USD growth scenario during the US session, count on short positions only in the area of the maximum of 1.2147. The formation of a false breakout will be a signal to sell the euro. If the bears do not show activity in the area of 1.2147, and the bulls will be able to take this range – it is best to abandon sales before the EUR/USD reaches a new local maximum in the area of 1.2197. You can also sell the euro for a rebound from the level of 1.2239, based on a downward correction of 20-25 points within the day.
In the COT report (Commitment of Traders) for April 20, the indicators of long and short positions changed quite seriously – short positions decreased, and long ones increased significantly, which indicates more active purchases of euros from players. The news that the vaccination program in the European Union is bearing fruit supports the euro, as well as the fact that in the near future, large countries in the eurozone will begin to withdraw more actively from quarantine. The European Central Bank's monetary policy decisions did not significantly affect the exchange rate of the European currency, as no changes were made and talk from the ECB board about a high euro rate. The COT report shows that long non-profit positions jumped sharply from 190,640 to the level of 197,137. In contrast, short non-profit positions declined from 123,789 to the level of 116,329, indicating an influx of new buyers in the expectation of continued growth of the euro. Therefore, it is not surprising that any calculation for a downward correction of the pair in the short term last week failed. As a result, the total non-profit net position rose sharply from 66,851 to the level of 80,808 a week earlier. The weekly closing price continued its rise to the level of 1.2042 against 1.1911 last week.
Signals of indicators:
Trading is conducted above 30 and 50 daily moving averages, which indicates the continuation of the upward trend.
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 1.3970 will lead to a new wave of euro growth. A break of the lower limit in the area of 1.3915 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. 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.