FX.co ★ EUR/USD: plan for the European session on June 16. COT reports. The market is in balance. Bulls aim to surpass 1.2145, while bears aim to return to the area below the 1.2103 support

To open long positions on EUR/USD, you need:

Yesterday was a fairly calm day for trading the European currency, even despite the release of quite important fundamental statistics for the EU and the United States. Let's take a look at the 5 minute chart and break down the entry points.

In the first half of the day, inflation in the eurozone countries did not surprise anyone, fully coinciding with the forecasts of economists, and the foreign trade balance dropped significantly, which did not allow euro buyers to get the pair to settle above the resistance of 1.2132. It is clearly seen how the bulls tried to rise above the level of 1.2132 and after a while the reverse test of this area from top to bottom occurred, which resulted in forming a buy signal. But it was not possible to stay above this range and the euro quickly fell. Therefore, we had to fix losses.

In the second half of the day, a similar story happened with the support at 1.2107, but the situation there was more successful. The formation of a false breakout at this level resulted in creating a signal to open long positions in the expectation of a recovery in the euro. There was no surge even despite the weak data on retail sales in the US, but it was possible to take about 25 points from the market.

The technical picture remained unchanged. Considering that the Fed will meet today, from which many expect the central bank to at least hint at curtailing the bond purchase program, and so the day promises to be interesting. In the first half of the day, apart from the speech of the European Central Bank representatives, important fundamental reports will not be published. It is quite possible that the market will continue to demonstrate low volatility. The main task of the bulls is to protect the support at 1.2103, with which they coped well yesterday. Forming a false breakout there generates a signal to open long positions with the expectation of a recovery to the resistance area of 1.2145, on which a lot also depends today. There are concerns that the bulls may ignore the support level of 1.2103 before the Fed meeting and allow the euro to go lower. In this case, I recommend considering new long positions only for a rebound from a larger low of 1.2063. I recommend buying EUR/USD immediately on a rebound only in the area of 1.2025, counting on an upward correction of 15-20 points within the day. If the bulls emerge in the first half of the day, then their target will be the resistance at 1.2145. A breakthrough and consolidation above this range will lead the pair to the high of 1.2190, where I recommend taking profits. The further target will be the resistance at 1.2222.

To open short positions on EUR/USD, you need:

The bears need to think of a way to protect the 1.2145 resistance, which the bulls will clearly aim for this morning. Considering that important fundamental reports will not be published in today's European session, it is not clear as to what could help the bears realize such a scenario. Forming a false breakout at the level of 1.2145 generates a signal to sell the euro, as this aims to pull down the euro to the area of the local low at 1.2103, on which quite a lot will depend once a breakthrough is achieved. Testing 1.2103 from the bottom up will create another signal to sell EUR/USD in hopes that it would fall to the new support at 1.2063, where I recommend taking profit. The next target will be the low of 1.2025. If the bears are not active around 1.2145 this morning, then I recommend postponing short positions until the resistance test at 1.2190, where you can immediately sell the pair on a rebound, counting on a downward correction of 15-20 points. The next serious level is at the new local resistance 1.2253.

The Commitment of Traders (COT) report June 8 shows that both long and short positions decreased. This indicated profit taking and traders leaving the market ahead of the European Central Bank's important meeting, following which there were no changes in monetary policy. Many were worried about what would become of the bond purchase program, but it remained unchanged, which did not allow the bulls to maintain control of the market. The pair is now at risk of significantly adjusting its positions ahead of an important Federal Reserve meeting, the results of which will set the market's direction for the next few weeks. The dollar can only hope that this summer the Fed will start talking in all seriousness about reducing the volume of bond purchases. If this does not happen, risk appetite will increase and we will see a recovery in the euro. The COT report indicated that long non-commercial positions declined from 237,360 to 232,103, while short non-commercial positions also dropped from 128,038 to 124,890. The more the European currency falls, the more interest it will attract, since the eurozone economy will demonstrate excellent growth rates in the summer, which will certainly affect the prospects for its recovery after the coronavirus pandemic. The total non-commercial net position declined from 109,322 to 107,213. The weekly closing price also declined from 1.22326 to 1.21907.

Indicator signals:

Trading is carried out in the area of 30 and 50 moving averages, which indicates the sideways nature of the market before an important decision from the Fed.

Moving averages

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.

Bollinger Bands

Volatility has significantly dropped, which does not provide signals to enter the market.

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.