In my morning forecast, I paid attention to the 1.0789 level and planned to make decisions on entering the market from it. Let's look at the 5-minute chart and figure out what happened there. The growth and formation of a false breakout there gave an excellent entry point into short positions. However, it never reached a major sale, and trading was conducted near the 1.0789 level for the entire first half of the day. In the afternoon, the technical picture was not revised.
To open long positions on EURUSD, you need:
Given the lack of important data on the eurozone, it is not surprising why the pair spent most of the first half of the day in a narrow side channel. Unfortunately, it is unlikely that anything will change during the American session. Data on the share of overdue mortgage payments, a fairly new parameter, is not of great interest to the foreign exchange market, so low volatility and volume cannot be avoided. I will act according to the plan for the first half of the day: given the sluggishness of the market, I plan to buy euros as low as possible, relying more on the support of 1.0755, where the moving averages are located higher, playing on the side of the bulls. The formation of a false breakout at this level will be a suitable option for entering the market in the expectation of an upward movement to the area of 1.0789. But a breakout and a top-down update of this range will lead to a strengthening of the pair with a chance of a breakthrough to 1.0812, which will allow the upward correction to continue with an exit above the upper limit of the side channel. The farthest target will be the 1.0850 area, where I will record profits. With the option of a decrease in EUR/USD and a lack of activity around 1.0755 in the afternoon, it is unlikely that the pressure on the euro will increase significantly, but problems for euro buyers will be added. In this case, I will enter only after the formation of a false breakdown in the area of the next support 1.0726. I'm going to open long positions immediately for a rebound from 1.0702 with the aim of an upward correction of 30-35 points within the day.
To open short positions on EURUSD, you need:
The sellers proved themselves, but this is clearly not enough to influence the situation as a whole. As long as trading is below 1.0789, as it was last Friday, the chances of the pair falling will remain. Before selling again, I would like to see the presence of major players in the market and see another formation of a false breakdown in the resistance area of 1.0789. This will be a suitable scenario for opening short positions with the prospect of a decline in the euro and an update of support at 1.0755. A breakout and consolidation below this range, as well as a reverse bottom-up test, will give another selling point with the pair moving to the low of 1.0726. The farthest target will be a minimum of 1.0702, where I will record profits. A test of this level will indicate a resumption of the bear market. In the case of an upward movement of EUR/USD in the afternoon, as well as the absence of bears at 1.0789, and buyers are trying to take this level for the second trading day in a row, bulls get a chance for a further upward correction. In this case, I will postpone sales until the test of the next resistance of 1.0812. I will also sell there, but only after an unsuccessful consolidation. I plan to open short positions immediately for a rebound from 1.0850 with the aim of a downward correction of 30-35 points.
The COT report (Commitment of Traders) for April 30 showed a reduction in long and short positions. The meeting of the Federal Reserve System could be interpreted in two ways, for this reason, there were no major changes in the market. Some have a chance that the Fed will start cutting rates this year, just as those who continue to buy the dollar, betting on a longer period of high interest rates, have exactly the same chances. The data released on the US labor market last week has not yet been taken into account in this COT report, so we do not fully see the whole picture. But despite this, I expect the pair to fall further within the framework of the observed medium-term trend. The COT report states that long non-commercial positions fell by 111 to 167,185, while short non-commercial positions plummeted by 3,323 to 173,962. As a result, the spread between long and short positions increased by 618.
Indicator Signals:
Moving Averages
Trading is above the 30 and 50-day moving averages, indicating further pair growth.
Note: The period and prices of moving averages considered by the author are on the hourly chart (H1) and differ from the general definition of classic daily moving averages on the daily chart (D1).
Bollinger Bands
In cases of decline, the lower boundary of the indicator, around 1.0755, will act as support.
Description of Indicators:
- Moving average (defines the current trend by smoothing out volatility and noise). Period 50. Marked in yellow on the chart.
- Moving average (defines the current trend by smoothing out volatility and noise). Period 30. Marked in green on the chart.
- MACD indicator (Moving Average Convergence/Divergence). Fast EMA period 12. Slow EMA period 26. SMA period 9.
- Bollinger Bands. Period 20.
- Non-commercial traders - speculators such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting 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 positions of non-commercial traders.
- The total non-commercial net position is the difference between the short and long positions of non-commercial traders.
