To open long positions on EURUSD, you need:
As a result of the euro's movements in the first half of the day, the technical picture in the pair did not change. Let's look at the 5-minute chart and talk about which entry points were formed. In the morning forecast, I paid attention to the level of 1.1780 and was advised to open short positions from it when forming a false breakdown. Everything coincided with the forecast: the bears successfully defended the above level, which led to pressure on the euro. However, we did not see a strong sell-off due to the fundamental data on the eurozone. Therefore, the focus on breaking weekly lows is shifting to the second half of the day.
Strong data on the US manufacturing and services sectors may pressure the euro during the US session, so all the emphasis will be placed on them. The main task of buyers remains to maintain control over the level of 1.1758, which also acts as the lower limit of the current side channel. The formation of a false breakdown forms a signal to open long positions to re-restore EUR/USD to the intermediate resistance of 1.1784. Fixing and testing this area from top to bottom forms an additional signal for opening long positions to continue the upward correction and counting on growth to 1.1804. The longer-term goal remains the upper limit of the side channel 1.1829, where I recommend fixing the profits. In the scenario of a decline in EUR/USD during the US session and the absence of bull activity in the support area of 1.1758, I recommend not to rush into purchases. It is best to postpone long positions until the test of a new low of 1.1740, where the formation of a false breakdown forms a buy signal. I advise buying the pair immediately for a rebound only from the next major support in the area of 1.1715, counting on an upward correction of 15-20 points within the day.
To open short positions on EURUSD, you need:
Sellers successfully coped with the task set for them and defended the resistance of 1.1780. During the American session, they need to seek a breakdown of the support of 1.1758, which acts as a kind of lower border of the side channel. Only going beyond this range will increase the pressure on the euro and completely put the market under sellers' control. Fixing below 1.1758 and testing it from the bottom up will form a good signal to open additional short positions with the expectation of an excellent in EUR/USD to the minimum of 1.1740. A more distant target will be the area of 1.1715, where I recommend fixing the profits. If EUR/USD rises during the European session, the sellers' focus will shift to protecting the resistance of 1.1784, formed from the level of 1.1780. It is best to open short positions when a false breakdown is formed. In the absence of bear activity and weak fundamental statistics on the US economy in the manufacturing and services sectors, I advise you to postpone sales until the test of a larger resistance of 1.1807. However, you can open short positions only after the formation of a false breakdown. I recommend selling the pair immediately for a rebound based on a downward correction of 15-20 points only from the maximum of 1.1829.
In the COT report (Commitment of Traders) for July 13, there was a market bias towards sellers of risky assets. And although long positions have practically 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 rate of inflation 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 below 30 and 50 daily moving averages, which indicates an attempt by bears to squeeze euro buyers at the end of the week.
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.
A break of the lower limit of the indicator in the area of 1.1760 will increase the pressure on the euro. A break of the upper limit of the indicator in the area of 1.1780 will lead to a new wave of growth of the pair.
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.