To open long positions on EURUSD, you need to:

In the first half of the day, I paid attention to the support of 1.2213 and recommended that it make decisions on entering the market. Let's look at the 5-minute chart and analyze the entry points. It is visible how the bears make a successful attempt to consolidate below this range. The test leads to the formation of a signal to open short positions. As a result of the fall in the euro, the target level of 1.2182 was tested, where I recommended taking the profits. The profit was about 30 points. Judging by what is currently happening in the market, the pressure on the pair may continue in the second half of the day.

The sharp drop in the euro came after releasing a rather weak report on retail sales in Germany, which put pressure on the pair, finally negating buyers' expectations for a rapid recovery of the EUR/USD after a slight correction earlier this month. The technical picture has changed slightly, and the initial task of the bulls will be to protect the support of 1.2162. Only the formation of a false breakout forms a signal to open long positions in the expectation of recovery of the pair in the second half of the day. The focus will be placed on the speech of the President of the European Central Bank, Christine Lagarde, who may raise the topic of changes in monetary policy. Only such a scenario will lead to the growth of EUR/USD in the resistance area of 1.2189. The test of this level from the bottom up forms an additional point for opening long positions in the expectation of a return to the resistance of 1.2213, where I recommend fixing the profit. Suppose the pressure on the euro continues in the second half of the day, and the bulls do not show any activity in the support area of 1.2162. In that case, it is best to postpone long positions until the next major level is updated in the area of 1.2134. You can buy the euro immediately for a rebound with the expectation of an upward correction of 15-20 points within the day.

To open short positions on EURUSD, you need to:

The bears will continue to fight for the market, trying to push through the next support level of 1.2162. A test of it from the bottom up will form a new sell signal to reduce it to the next support of 1.2134, where I recommend fixing the profit. Its failure will lead to an update of the minimum of 1.2085. However, such an active bear market can only be expected if the Federal Reserve representatives touch upon changes in monetary policy during their speeches today. Although the growing demand for the US dollar is unlikely to help the euro recover seriously without it. In the scenario of EUR/USD growth in the second half of the day, only the formation of a false breakout in the resistance area of 1.2189 will form a new signal to sell the pair. In the absence of bear activity in this range, I recommend postponing short positions immediately for a rebound from the large resistance of 1.2213 to expect a downward correction of 15-20 points. The next serious level is at a new local maximum in the area of 1.2249.

Let me remind you that the COT report (Commitment of Traders) for May 25 shows an increase in long positions and a reduction in short ones, which indicates an increase in demand for the European currency before the start of the last month of the second quarter of this year. It is expected that the European economy will show particularly strong growth in the summer, which will lead to new growth of the European currency in the area of annual highs. Data on the growth rate of the US economy in the 1st quarter of 2021 did not particularly surprise last week, which led to continued pressure on the US dollar. Traders now perceive any strong movements of the EUR/USD pair as an excellent opportunity to gain long positions in the continuation of the bull market. Only the news that the Fed is seriously going to reduce the volume of bond purchases will lead to a serious increase in the US dollar. However, we will know about this only by mid-June. Up to this point, every time the pair declines, the demand for risky assets will return. The COT report shows that long non-profit positions jumped from 232,330 to the level of 236,103, while short non-profit positions fell from the level of 132,472 to the level of 132,103. It indicates an influx of new buyers in the expectation of continued growth of the euro and a wait-and-see attitude on the part of sellers.

Given that the pair has been standing at local highs for quite a long time, the bulls accumulate long positions. However, the sellers are gradually getting rid of the euro. It indicates a possible breakdown of monthly highs in the near future and the continuation of the euro's growth. The total non-profit net position increased from 99,858 to 104,000. The weekly closing price also increased from the level of 1.21564 to 1.22142.

Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 daily moving averages, which indicates an attempt by the bears to control the market.

Note: The period and prices of the 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.

Bollinger Bands

In the case of an upward correction of the pair, the average border of the indicator in the area of 1.2210 will act as a resistance.

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.