FX.co ★ EUR/USD: plan for the European session on June 18. COT reports. Euro continued to fall and support at 1.1880 under bears' sight

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

Yesterday, the euro was under pressure and the pair fell to the next local lows. Let's take a look at the 5 minute chart and understand the entry points that were formed.

In the first half of the day, a breakthrough of the 1.1986 level led to its reverse test and formed a signal to open short positions in continuation of the bearish market. The fall was not long in coming, and after a while the pair tested the new level at 1.1958 and broke through below this range. A reverse test of this area from bottom to top created an additional signal to open short positions in hopes of entering a new local low of 1.1923.

The 1.1923 area was updated in the afternoon, which resulted in creating a false breakout and a small upward correction by 20 points. The bears managed to break through the area below 1.1923 towards the middle of the US session, and its test from the bottom up created an additional entry point for short positions. The downward movement was about 30 points.

It is quite possible that today the bears will moderate their ardor quite a bit at the end of the week, so that the bulls will have a chance to build an upward correction in the pair. The main task of the bulls in the first half of the day is to protect the support at 1.1880. Good reports on Germany and the eurozone and a false breakout there creates a signal to open long positions with expectations of a recovery in the resistance area of 1.1923, to which the moving averages, playing on the side of the bears, are gradually being pulled up. A breakthrough and test of this level from top to bottom can create another signal to open long positions in order to restore the pair to the larger resistance at 1.1961, where I recommend taking profits. The next target will be the1.2003 area. In case the bulls are not active in the 1.1880 area, I recommend not to rush into long positions, but to wait for the next support at 1.1839 to update, or buy EUR/USD on a rebound from the 1.1805 low, counting on an upward correction of 15-20 points within the day.

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

The bears need to defend resistance at 1.1923, on which a lot depends today, as a number of stop orders of speculative sellers may be located above this level, betting on the euro's succeeding decline. Forming a false breakout there in the first half of the day will be an excellent signal to open short positions in continuation of the downward trend formed in the middle of this week. But a more important task is to break through the low of 1.1880, where a divergence is now forming on the MACD indicator, seriously limiting the pair's succeeding downward potential. A breakthrough and test of this area from the bottom up can create a good signal to open short positions in hopes that the EUR/USD further falls to new lows of 1.1839 and 1.1805, where I recommend taking profits. A disappointing eurozone report could be the catalyst for this move. In case the bears are not active in the 1.1923 area today, I recommend postponing short positions until the resistance test at 1.1961, where you can immediately sell the pair on a rebound, counting on a downward correction of 15-20 points. There are also moving averages above this level that play on the bears' side..

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 below 30 and 50 moving averages, which indicates a bearish market.

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

Surpassing the lower border of the indicator in the area of 1.1900 will increase the pressure on the euro. In case of an upward correction of the pair, the upper border of the indicator in the area of 1.1950 will act as a resistance.

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.