11.06.202108:42 Forex Analysis & Reviews: EUR/USD: plan for the European session on June 11. COT reports. Sharp market movements did not lead to a change in the technical picture

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

Market volatility was at a fairly high level yesterday. This is due to the decision of the European Central Bank on monetary policy, as well as the report on inflation in the US, which helped the bears to keep the pair within the horizontal channel. Let's take a look at the 5 minute chart and see what happened.

In my morning forecast for the first half of the day, I paid attention to the 1.2152 level. The bears tried to fall below this range, but this one did not work out very well. A few points were missing before this level was tested, so it was not possible to form a false breakout there for the move to long positions. In the second half of the day, the situation developed in a completely different way: forming a false breakout in the resistance area of 1.2185 resulted in creating an entry point to short positions, which quickly pushed the pair to support at 1.2152. There, the bulls did everything to protect this level and they did it pretty well. The bulls responde with a false breakout and rising back to the resistance of 1.2185. The second part of the US session was calmer, but even then the bears managed to bring the pair back below the level of 1.2185, creating another entry point for short positions there.

Exchange Rates 11.06.2021 analysis

Important fundamental reports on the eurozone will not be published this morning, therefore, volatility promises to be quite restrained. It is unlikely that the inflation reports in Spain and France will be able to have a positive impact on the euro. The main task of the bulls for the European session is to protect support at 1.2177, where the moving averages play on their side. Forming a false breakout in this range generates a signal to open long positions in order to return to the resistance of 1.2215. A breakthrough and test of this area from top to bottom can create an entry point to long positions in hopes of a new upward trend in order to renew the high of 1.2250. A larger resistance level is seen around 1.2283, where I recommend taking profits. If bulls are not active in the area of 1.2177, it is better to postpone long positions until the test of support at 1.2144, from which it is also possible to enter the market only if a false breakout is formed. I recommend buying EUR/USD immediately on a rebound from a low of 1.2105, counting on an upward correction of 15-20 points within the day.

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

The bears will fight to regain control of the market, and for this it is necessary to protect the large resistance at 1.2215, which also acts as the upper border of the horizontal channel, in which the pair has been in for the entire week. Forming a false breakout there creates a signal to sell the euro for the purpose of pulling it down to the area of the middle border of the horizontal channel at 1.2177. Although the level is intermediate, the current intraday market direction depends on it. Weak data on inflation in European countries will lead to its breakthrough. The 1.2177 test from the bottom up creates an additional signal to sell EUR/USD in order to return to the lower border of the horizontal channel at 1.2144, where I recommend taking profits. The next target will be the low of 1.2105, but we will reach it only in case we receive very strong data from the University of Michigan on the American economy. If the bears are not active in the area of 1.2215 this morning, then I recommend postponing short positions until the resistance test of 1.2250, where you can immediately sell the pair counting on a downward correction of 15-20 points. The next serious level is at the new local resistance 1.2283.

Exchange Rates 11.06.2021 analysis

The Commitment of Traders (COT) report June 1 shows that long positions increased while short positions decreased, which indicates a growth in demand for the European currency in the last month of the second quarter of this year. The European economy is expected to show a particularly strong recovery in the summer, which will lead to new growth for the euro in the area of annual highs. Lifting a number of quarantine restrictions, which are still in effect in European countries, will lead to an even greater revival of the economy, which will provide momentum through an increase in retail sales and inflation, which, according to the latest report, has seriously increased in the eurozone. The data on activity in the manufacturing and service sectors also continue to delight economists, which again indicates a serious recovery. Any strong downward movement of the EUR/USD pair is now perceived by traders as a good opportunity to gain long positions in continuation of the bull market. The dollar can only hope that in the summer, the Federal Reserve will start to seriously talk about reducing the volume of purchases of bonds, but we will know about this only by mid-June. The COT report showed that long non-commercial positions jumped from 236,103 to 237,360, while short non-commercial positions fell from 132,103 to 128,038. This indicates an influx of new buyers that expect the euro to continue rising, while sellers have a wait-and-see attitude. Considering the fact that the pair significantly recovered last Friday, this may indicate the formation of a new upward trend and the return of EUR/USD to local highs. This is where the bulls will continue to accumulate long positions in hopes of going beyond them. This indicates a possible breakdown of last month's highs in the near future and the continued growth of the euro. The total non-commercial net position rose from 104,000 to 109,322. The weekly closing price also increased from 1.22142 to 1.22326.

Indicator signals:

Moving averages

Trading is carried out slightly above 30 and 50 moving averages, which so far indicates the sideways nature of the market.

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 1.2165 will lead to a major downward movement for the euro. A breakthrough of the upper border of the indicator in the area of 1.2190 will strengthen the euro.

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.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Miroslaw Bawulski,
Analytical expert of InstaForex
© 2007-2021
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