To open long positions on EURUSD, you need to:
In the first half of the day, there were several interesting signals for entering the market. Let's look at the 5-minute chart and talk about what happened. Given that there were no fundamental statistics on the euro area today, it was quite surprising to see the euro rise to the resistance area of 1.2108, where I advised opening short positions. Given that we fell just 2 points short of the level, some people might have missed this signal. However, I opened short positions, as I was sure that the bear market formed yesterday would continue. As a result, we managed to collect about 30 points of profit.
In the afternoon, the situation changed a lot. After the bulls regained the level of 1.2066, I revised it and moved it lower to the area of 1.2055. While trading will be conducted above this range, you can count on the repeated growth of the euro in the area of the morning high of 1.2103, where I recommend taking the profits. However, it is worth remembering that we expect a report on the US labor market in the second half of the day. And although the data will be weekly, good indicators can return the pressure on the pair. A break and consolidation above the resistance of 1.2103 will lead to a new wave of growth of the euro already in the area of the maximum of 1.2149, where I recommend taking the profits. In the scenario of a decline in EUR/USD during the US session, I recommend postponing purchases until the formation of a false breakout in the area of 1.2055. If the bulls do not show any activity, I will open long positions only for a rebound from the new local low of 1.2023, counting on an upward correction of 15-20 points within the day.
To open short positions on EURUSD, you need to:
The bears confidently declared themselves in the resistance area of 1.2108, which led to a fairly large drop in the pair. However, after the breakdown of 1.2066, it was impossible to gain a foothold below this range. To continue the downward trend, the sellers of the euro need to take control of a new large level of 1.2055. It will be possible to implement this scenario after the report on the US labor market and provided that the data will be much better than economists' forecasts. A break and a test of the level of 1.2055 from the bottom up on the volume will form a signal to sell the euro to continue the downward trend to the area of the minimum of 1.2023, where I recommend taking the profit. If we see a breakout of this range, we can safely count on an update to the low of 1.1988, which coincides with the major May support level. If we again see an upward correction of the pair in the second half of the day, then it is best not to rush with sales: the formation of a false breakout in the resistance area of 1.2103 forms a new sell signal to further reduce the EUR/USD. In the absence of bear activity at this level and a sharp increase in the pair above, I recommend postponing short positions immediately for a rebound from the large resistance of 1.2149 in the expectation of a downward correction of 15-20 points within the day. The next major level is seen in the area of 1.2180.
Let me remind you that the COT report (Commitment of Traders) for May 4 showed an increase in both short and long positions. However, there were more buyers now, which led to an increase in the overall non-commercial position. Last week, everyone was waiting for data on the US labor market and expected the continued growth of risky assets, which happened. Therefore, the growth of long positions outweighed short ones. The insufficient data proves once again that the Fed will continue to stay on course, even despite the sharp economic jump. This strategy will keep the pressure on the US dollar and will allow us to further increase long positions in risky assets, which will push EUR/USD upwards. The COT report shows that long non-profit positions jumped from the level of 200,415 to the level of 206,472, while short non-profit positions rose from 119,448 to the level of 121,643. It indicates an influx of new buyers in the expectation of continued growth of the euro, but with each update of the maximum, there are more and more willing to sell. The more the euro shows growth this month, the stronger the influx of new sellers will be since no one has canceled changes in the Fed's monetary policy this year. The total non-profit net position increased from 80,967 to 84,829. The weekly closing price, on the contrary, fell from the level of 1.20795 to the level of 1.20591.
Signals of indicators:
Moving averages
Trading is below 30 and 50 daily moving averages, which indicates a further fall in the euro.
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
A break of the upper limit of the indicator in the area of 1.2089 will lead to a new wave of euro growth. A break of the lower limit of the indicator in the area of 1.2060 will increase the pressure on 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 9Bollinger Bands (Bollinger Bands). Period 20Non-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.