To open long positions on EURUSD, you need to:
As expected, the German foreign trade balance data did not impress traders, which kept the pair in a narrow side channel in the first half of the day. Let's look at the 5-minute chart: unfortunately, due to the low volatility, even the nearest support and resistance levels were not updated, which did not allow us to get any signals on entering the market. The situation will not change much in the second half of the day, as there are no important reports scheduled for the US session. The technical picture remained unchanged.
We did not reach the support of 1.2155. Thus, in the second half of the day, the focus of the bulls will be on it. The formation of a false breakout will form a signal to open long positions, after which buyers will again target the resistance of 1.2201, which they failed to get beyond yesterday. A breakout and a test of this area already from top to bottom on the volume can form an entry point into long positions to continue the upward trend, counting on the next maximum of 1.2225. The next target will be the level of 1.2250, where I recommend fixing the profit. Under the scenario of strong data on changes in the volume of stocks in wholesale warehouses in the United States and the absence of bull activity in the area of 1.2155, long positions can be safely opened from a large low in the area of 1.2113 or even lower - in the area of 1.2073, based on an upward correction of 15-20 points within the day. If buyers fail to get out of the resistance of 1.2201 today, trading will continue in the new wide side channel of 1.2123-1.2201.
To open short positions on EURUSD, you need to:
Bears will fight for the return of the market under control. For this, you need to achieve a breakdown of the support of 1.2155. A breakout and a test of this level from the bottom up will form the first signal to open short positions, which will drag the pair into a downward correction, limiting the further bull market for at least a while. Good fundamental data on the US can help EUR/USD return to the lower border of the side channel 1.2113, where I recommend taking the profits. The next target will be a minimum of 1.2073. However, such a scenario is unlikely to be possible without serious market shocks. If there is no bear activity today in the second half of the day, the euro can recover to the resistance of 1.2201, from where it is possible to open short positions only if a false breakout is formed. I recommend selling EUR/USD immediately for a rebound only after updating the resistance of 1.2225 or even higher - after testing the maximum of 1.2250 in the expectation of a downward correction of 15-20 points.
Let me remind you that the COT report (Commitment of Traders) for June 1 shows an increase in long positions and a reduction in short ones, indicating an increase in demand for the European currency in the last month of the second quarter. It is expected that in the summer, the European economy will show a particularly strong recovery, which will lead to new growth of the European currency in the area of annual highs. The lifting of several quarantine restrictions, which are still in effect in European countries, will lead to an even greater recovery of the economy, which will give it a boost through increased retail sales and inflation, which has seriously increased in the euro area according to the latest data. Data on activity in the manufacturing sector and the service sector also continue to please economists, which once again indicates a serious pace of recovery. Traders now perceive any strong movements of the EUR/USD pair downwards as an excellent opportunity to gain long positions in continuing the bull market. The dollar can only hope that the Federal Reserve System will seriously talk about reducing the volume of bond purchases in the summer. However, we will not know about this until mid-June. The COT report shows that long non-profit positions jumped from 236,103 to 237,360, while short non-profit positions fell from 132,103 to 128,038. It indicates an influx of new buyers in the expectation of continued growth of the euro and a wait-and-see attitude on the part of sellers.
Given that the pair had seriously recovered last Friday, this may indicate the formation of a new upward trend and the return of EUR/USD to local highs. It is where the bulls will continue to accumulate long positions with the expectation of going beyond them. It indicates a possible breakdown of the highs of last month in the near future and the continuation of the euro's growth. The total non-commercial net position increased from 104,000 to 109,322. The weekly closing price also increased from 1.22142 to 1.22326.
Signals of indicators:
Trading is conducted in 30 and 50 daily moving averages, indicating market uncertainty with the further direction.
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.
The volatility is very low, which does not give signals to enter the market.
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 specific 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.