To open long positions on EUR/USD, you need:
Lack of reaction to such important reports like the US GDP and German inflation report indicate that traders are somewhat confused about the pair's succeeding direction. According to the report, US real gross domestic product grew 6.4% in the first quarter of this year, following a 4.3% jump in the fourth quarter of 2020. Economists had expected a 6.0% increase in GDP. And although the data exceeded economists' forecasts, there was no rapid movement in the pair. If you look at the 5 minute chart, you can see how the euro slightly fell against the US dollar, reaching the 1.2111 level I have mentioned, and then it also slightly recovered in the afternoon. The incomprehensible situation around 1.2111 and the "smearing" of this area would not make it possible to create a normal entry point to the market in either direction.
The technical picture of the pair has not changed in any way. I slightly revised the nearest support and resistance levels due to low market volatility. Today we are waiting for a lot of reports on the eurozone countries. Traders will pay attention to data on the growth rates of European countries and the overall GDP of the eurozone, which can affect the EUR/USD pair's movement. It is expected that the data for the first quarter will be worse than economists' forecasts, which will return the pressure on the pair. Maintaining quarantine measures this winter should worsen growth forecasts.
Therefore, euro bulls should try to prevent the pair from falling below an important support like 1.2103, which was formed yesterday afternoon. Forming a false breakout in this range, slightly above which the moving averages pass, playing on the bull's side, can create a good entry point in continuing the upward trend. If the bulls are not active at the 1.2103 low, then it is best to hold back from long positions until the new lower boundary of the weekly sideways channel near 1.2060 has been updated, from where you can buy the euro immediately on a rebound while counting on an upward correction of 20-25 points within the day. A breakthrough and consolidation above the 1.2134 range will be an equally important task for the bulls A reverse test of this level from top to bottom generates a signal to open new long positions in hopes of continuing the upward trend in the area of a new monthly high like 1.2181, where I recommend taking profits. The next target will be the 1.2240 level, but we will be able to reach it only at the beginning of May, provided that the current bullish momentum continues.
To open short positions on EUR/USD, you need:
The bears are smoothly trying to take control of the market, but so far it is difficult to say that they have succeeded. The main task is to form a false breakout in the resistance area of 1.2134 in the first half of the day, since this scenario creates a good signal to open short positions in hopes of a larger downward correction to the support area of 1.2103. Surpassing this range will also be an important task. Weak data on the growth rates of the European economy and a reverse test of the 1.2103 level from the bottom up can create a new entry point for short positions for the purpose of reaching the 1.2060 low, where I recommend taking profit. If the bears are not active in the 1.2134 area, and the bulls manage to take this range for themselves, it is best to refuse to sell until EUR/USD reaches a new local high in the 1.2181 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 in the area of 30 and 50 moving averages, which indicates the sideways nature of the 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.
Volatility is very low, which does not provide signals to enter the market based on the indicator.
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.