FX.co ★ EUR/USD: plan for the US session on May 6 (analysis of morning trades)

To open long positions on EURUSD, you need to:

In my morning forecast, I paid attention to the resistance of 1.2025 and recommended making decisions from it. It can be seen that after an active growth to this level, the pair stops. After that, a false breakout is formed, which forms a good signal to open short positions to continue the current bear market. However, after some time, the bulls still take control of 1.2025 and follow the sellers' stop orders, which led to such a sharp increase in EUR/USD during the European session. I could not enter long positions, as I did not wait for the reverse test of the level of 1.2025 from top to bottom. I drew the script with blue lines.

Now the key target of buyers will be the resistance of 1.2059, which we have not reached yet. Further bullish momentum will depend on the statements made by the President of the European Central Bank, Christine Lagarde, as well as on the data on the US economy, the release of which is scheduled for the second half of the day. The optimal scenario for opening long positions will be a downward correction of EUR/USD to the support area of 1.2025, the breakthrough of which we saw today in the first half of the day. The formation of a false breakout forms a good entry point to buy. An equally important task for the bulls will be to break through and consolidate above the resistance of 1.2059. A test of this level from top to bottom will form a convenient entry point into long positions, which will lead the euro to a new high in the area of 1.2096, where I recommend taking the profits. In the scenario of the absence of bull activity in the area of 1.2025 and the negative reaction of the market to the speech of the ECB President: I recommend postponing purchases until the test of this week's lows in the area of 1.1988, from which you can open long positions immediately for a rebound in the expectation of a correction of 15-20 points within the day.

To open short positions on EURUSD, you need to:

Bears are in no hurry to return to the market after they missed a fairly important resistance level without showing much activity on it. The optimal scenario for opening short positions in the second half of the day will be forming a false breakout in the resistance area of 1.2059, similar to the one that was analyzed a little higher. Only this will increase the pressure on the pair and push it back to the support of 1.2025. If the bears manage to take back control of the level of 1.2025, the test of which from the bottom up forms an additional point for sales, then we can safely talk about the capitulation of today's buyers and the continuation of the downward trend. If sellers do not show much activity in the resistance area of 1.2059, then it is better not to rush with short positions: a good moment for selling the euro will be the update of the next resistance of 1.2096, from which you can open short positions immediately for a rebound in the expectation of a correction of 15-20 points within the day.

Let me remind you that the COT report (Commitment of Traders) for April 27 showed an increase in both short and long positions, but the latter turned out to be more, which led to an increase in the overall non-commercial position. It suggests that active purchases of the euro by the players continue, and you can bet on the further strengthening of the pair after a downward correction. The Federal Reserve's decisions on interest rates and monetary policy did not significantly affect the US dollar, as did the next programs proposed by US President Joe Biden to stimulate economic growth in the near future through changes in the tax system. Given that the Fed will continue to stick to the previous course even despite the sharp economic jump, the demand for risky assets will most likely continue after the decline of the EUR/USD pair earlier this month. The COT report shows that long non-profit positions jumped sharply from 197,137 to the level of 200,415.

In contrast, short non-profit positions rose from 116,329 to the level of 119,448, indicating an influx of new buyers in the expectation of continued growth of the euro. The more the euro is adjusted downwards at the beginning of this month, the stronger the demand will be. As a result, the total non-commercial net position rose sharply from the level of 80,808 to the level of 80,967. The weekly closing price continued its growth to 1.20795 from the level of 1.2042 a week earlier.

Signals of indicators:

Moving averages

Trading is above the 30 and 50 daily moving averages, indicating a tipping point for euro sellers.

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

In the case of a downward correction, the average border of the indicator in the area of 1.010 will act as support.

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.