To open long positions on EUR/USD, you need:
Yesterday I paid attention to the 1.1887 level and recommended making decisions on entering the market from it. Let's take a look at the 5 minute chart and talk about what happened. Several unsuccessful attempts to settle below the 1.1887 level formed signals to open long positions in continuation of the upward correction, which we have been observing since the beginning of this week. The breakthrough and consolidation above the level of 1.1923 occurred without a reverse test, so it was not possible to enter long positions there in the second half of the day.
The bulls have a chance to build a succeeding upward correction, but in order to do so there should be good data on PMI indices for the manufacturing and services sectors of the eurozone countries. The main task in the first half of the day is to protect the support at 1.1898. Forming a false breakout there generates a signal to open long positions in hopes that the pair would recover to the resistance area of 1.1950, since the pair could not go beyond this level yesterday. A breakthrough and test of this level from top to bottom may create another signal to open long positions in order to restore the pair to the larger resistance of 1.2000, where I recommend taking profits. The next target will be the area of 1.2033. In case the bulls are not active around 1.1898, I recommend not to rush into long positions. It is best to wait until the next support at 1.1852 has been updated, or buy EUR/USD to bounce off the 1.1805 high, 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 the 1.1950 resistance, which they successfully protected yesterday afternoon. Forming a false breakout at 1.1950 in the morning, together with weak data on activity in the eurozone countries, will be an excellent signal to open short positions in continuation of the downward trend that was formed in the middle of last week. But what is more important is for the bears to break the support at 1.1898. A breakthrough and test of this area from the bottom up will form a good signal to open short positions, and its purpose is for EUR/USD to fall to the lows of 1.1852 and 1.1805, where I recommend taking profits. European Central Bank President Christine Lagarde is scheduled to speak this afternoon and her monetary policy statements could be the start of a new bear market. If the bears are not active in the 1.1950 area this morning, I recommend postponing short positions until the resistance test of 1.2000, where you can immediately sell the pair on a rebound, counting on a downward correction of 15-20 points.
The Commitment of Traders (COT) report June 15 shows that both short and long positions significantly fell, however, the data does not take into account the Federal Reserve's decision on interest rates, so I do not recommend putting a lot of emphasis on these indicators right now. Let me remind you that last week, the euro went back to falling against the US dollar after the Fed's first hints about an earlier increase in interest rates in 2023. It also suggests that the US central bank may soon begin phasing out its bond buying program, which will further strengthen the dollar on the global stage. Inflation data that was recently released for the US and the eurozone suggests that the European Central Bank will not rush to make changes in its policy yet, which also weakens the euro's position. Most likely, the trend towards strengthening of the US dollar will continue this week. The COT report indicates that long non-commercial positions fell from 232,103 to 210,816, while short non-commercial positions fell from 124,890 to 92,630. It should be understood that the lower the European currency falls, the more interest it will challenge traders, as the eurozone economy is aimed at strong growth in the summer, which will certainly affect the prospects for its recovery after the coronavirus pandemic. The total non-commercial net position rose from 107,213 to 118,186. The weekly closing price declined from 1.2190 to 1.2121.
Indicator signals:
Trading is carried out above 30 and 50 moving averages, which indicates an attempt by the bulls to continue the upward correction of the pair.
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 1.1898 will increase pressure on the euro. A breakthrough of the upper border of the indicator around 1.1950 will lead to a new wave of euro growth.
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.
