EUR/USD: plan for the US session on May 17 (analysis of morning trades)

To open long positions on EURUSD, you need to:

The data on inflation in Italy coincided with the forecasts of economists. Thus, the euro buyers had no choice but to try to break through the resistance of 1.2149 with their strength. Let's take a look at the 5-minute chart and talk about what came out of it. After the breakout and consolidation above the resistance of 1.2149, the bears tried to return the market under their control. However, it did not work out very well, after which a signal was formed to buy the euro in the continuation of Friday's upward trend. However, to enter the market in the best case, it would have turned out at the price of 1.2155, and only the pair reached 1.2170. +15 points are not such a good result. Those who missed this entrance did not lose much. The second half of the day promises to be relatively calm, but the sellers of the euro will try to take advantage of good statistics on the United States.

The levels for the US session have changed. The initial goal of the bulls will be to protect the support of 1.2135, where the moving average also passes, playing on the side of buyers. However, only forming a false breakout will form an excellent point to enter the market to continue the upward trend and return to the maximum of 1.2167, where I recommend fixing the profit. Suppose the data on the US economy disappoints economists, and the housing market and the manufacturing index turn out to be worse than economists' forecasts. In that case, the bulls may be able to break above 1.2167. A test of this area from top to bottom forms an excellent signal to open long positions to reach a new local maximum of 1.2202. In the scenario of a further decline in the euro to the lows of the day and the absence of bull activity in the area of 1.2135 – it is best to postpone long positions until the update of the minimum of 1.2103, from which you can open long positions immediately on the rebound in the expectation of an upward correction of 15-20 points within the day. The next significant support is around 1.2055.

To open short positions on EURUSD, you need to:

The bears are slowly but surely returning the market to the opening area of the day, trying to take it under their control. Good data on the US economy is sure to revive in the memory of traders the inflation report from last week, which will lead to a slight strengthening of the US dollar against the euro. To resume the downward trend, the euro sellers need to take control of a new large level of 1.2135. Only a breakout and its test from the bottom up on the volume will form a signal to sell the euro with the aim of a downward correction to the area of the minimum of 1.2103, where I recommend taking the profit. A more distant target will be the area of 1.2055. However, it is unlikely to be available today. If in the second half of the day we again see and observe the pair's growth, it is best not to rush with sales: the formation of a false breakout in the resistance area of 1.2167 forms a new signal to open short positions to reduce EUR/USD. In the absence of bear activity at this level and the sharp growth of the pair above, I recommend postponing the sale immediately for a rebound from the considerable resistance of 1.2202 in the expectation of a downward correction of 15-20 points within the day.

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 poor data once again proves that the Fed will continue to stick to its previous course even despite the sharp economic jump. Such a strategy will keep the US dollar pressure and allow us to increase further long positions in risky assets, which will push EUR/USD up. 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 conducted above 30 and 50 daily moving averages, which indicates further growth of 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 1.2160 will lead to a new wave of euro growth. A break of the lower limit of the indicator in the area of 1.2220 will increase the pressure on the pair.

Description of indicators