To open long positions on EURUSD, you need:
In the first half of the day, there was no particular excitement in the market before the speech of the President of the European Central Bank after the monetary policy meeting. Let's look at the 5-minute chart and figure out the deals. Buyers successfully defended the support of 1.1783 during the European session. A false breakout at this level led to the formation of a signal to open long positions. However, as we can see on the chart, there was no major growth. The market will be rocked only by the results of the ECB meeting. Thus, the technical picture remained unchanged.
As noted above, the entire focus will be on the publication of the decision of the European Central Bank on monetary policy, which may be decisive for the medium-term direction of the pair. The regulator may change its attitude to the level of inflation and, accordingly, revise the date of the first increase in interest rates to a later one, which will put pressure on the euro. The focus of buyers of the euro will remain at the level of 1.1804. Only a breakout and consolidation above this range, followed by its test from top to bottom, will form a signal to open long positions to continue an upward correction, counting on growth to the upper border of the side channel 1.1825. However, in the event of a sharp movement of the euro after the ECB statements, it is unlikely that it will be possible to count on a pullback to the area of 1.1804. Thus, it may well make sense to look at purchases for a breakthrough of 1.1804. Growth above 1.1825 forms a more powerful bullish impulse, which will open a direct road to the highs of 1.1849 and 1.1874, where I recommend taking the profits. However, such a powerful movement will be possible only after statements by the President of the European Central Bank, Christine Lagarde, that the regulator's plans to curtail measures to support the economy remain in force, which is unlikely. In the scenario of a decline in EUR/USD during the US session, and I am counting more on such a scenario, the bulls need to think about protecting the support of 1.1783, where the moving averages are playing on their side. Only the formation of a false breakdown will help euro buyers to continue the pair's growth in the short term. If there is no activity of bulls at this level, I advise you not to rush with purchases and not try to catch the bottom. If the euro starts to fall sharply after the ECB meeting, the nearest levels can be seen in the area of 1.1740 and 1.1715. From the level of 1.1715, you can even try to catch an upward correction of 15-20 points inside the day.
To open short positions on EURUSD, you need:
Sellers are not in a hurry to return to the market and are waiting for the meeting results. The bulls made it clear that they will not give up the level of 1.1783 so easily today. Therefore, we postpone trading until the ECB decides on interest rates. Any exit beyond 1.1804 can cost the bears dearly. Thus, only the formation of a false breakdown forms a signal to open short positions in the expectation of continuing the bearish trend formed at the beginning of this week. An important goal will be the support of 1.1783, which acts as a middle of the channel. Fixing below this range and testing it from the bottom up will form an excellent signal to open additional short positions, counting on the pair falling to the minimum of 1.1763. A more distant target will be the area of 1.1740, where I recommend fixing the profits. In the case of EUR/USD growth during the US session and the absence of bull activity at the level of 1.1804, it is best to postpone sales until the test of a larger resistance of 1.1825. However, it is possible to sell the pair immediately for a rebound only from the highs of 1.1849 and 1.1874 and then count on a downward correction of 15-20 points. Remember that a major market movement will be formed immediately after the publication of the decision of the European Central Bank on monetary policy, as well as during the press conference of Christine Lagarde. The direction of the euro will depend on what European politicians will say.
In the COT report (Commitment of Traders) for July 13, there was a market bias towards sellers of risky assets. And although the long positions have not changed in any way, the sharp growth of short positions has led to another reduction in the overall positive net position. The fact that American inflation continues to grow and both Jerome Powell and President Joe Biden speak about it indicates the seriousness of the situation. And no matter how the central bank tries to convince investors that this is just a temporary phenomenon, the market continues to abandon risky assets favoring safe-haven assets, which is the US dollar. This week, the picture can only get worse, as the European Central Bank will hold a meeting on Thursday. Politicians will announce a new mandate regarding the long-term inflation rate in the eurozone, which may lead to a revision of plans for monetary policy in the near future. It will be a certain shock for the euro, and it isn't easy to guess what the market reaction will be. But the lower the euro falls, the higher the demand for it will be in the medium term since the attractiveness of risky assets has not gone away. The COT report indicates that long non-commercial positions remained virtually unchanged and decreased from the level of 212,998 to the level of 212,851.
In contrast, short non-commercial positions increased from the level of 135,808 to the level of 153,138. In addition to the decision of the European Central Bank, we are waiting for interesting fundamental statistics on the activity of the service sector and the manufacturing sector of the eurozone countries, which can affect the direction of the euro in the short term. The total non-commercial net position decreased from the level of 77,190 to the level of 59,713. The weekly closing price remained unchanged at 1.1862.
Signals of indicators:
Trading is conducted in 30 and 50 daily moving averages, which indicates the lateral nature of the market.
Note: The period and prices of 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 has decreased significantly before the important news, giving signals for entering 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.