Yesterday, several good market entry signals were formed. Let's take a look at the 5-minute chart and analyze what happened there. In my morning forecast, I mentioned the 1.0927 level and recommended making market entry decisions from this level. Growth and the formation of a false breakout at this level led to a sell signal for the euro, after which the pair fell by more than 30 pips. In the second half of the day, an upward surge led to a renewal and a similar false breakout at 1.0975, allowing traders to take another 30 pips in profit.
For long positions on EUR/USD:
Euro buyers still have a chance to continue the upward trend. To achieve this, it would be ideal to see positive data for the Eurozone services PMI index for March and a rise in the composite PMI index. A revival in activity will undoubtedly trigger an upward inflation movement, leaving the European Central Bank with no choice but to maintain demand for the euro. A speech by ECB Executive Board member Philip Lane should also strengthen the buyers' positions. In the case of a negative reaction to the data, 1.0927 will act as a good support level, where the moving averages are playing on the side of the bulls. This is where I plan to wait for the formation of a false breakout with a buy signal and a target to update this month's high around 1.0975. A breakout and a top-down test of this range will form an additional entry point for adding long positions with growth toward 1.1002. The ultimate target remains the 1.1031 area, where I will take profit. If EUR/USD declines and there are no buyers at 1.0927, which cannot be ruled out as a correction is needed for growth to continue, pressure on the euro will return, and we will see a downward movement to 1.0881. Only the formation of a false breakout there will give a buy signal for the euro. I will open long positions immediately on the rebound from the low of 1.0833, keeping in mind an upward correction of 30-35 pips within the day.
For short positions on EUR/USD:
Sellers tried their best yesterday, but buyers turned out to be stronger. Now the most crucial thing is not to miss the nearest resistance at 1.0975 which was tested yesterday during the US session. At this level, I expect to see new large players, so the optimal scenario for opening new short positions will be the formation of a false breakout there. Weak data on activity in the Eurozone's service sector will increase pressure on the euro, leading to a decline in the pair near the support at 1.0927. A breakout and reverse test of this range will increase the pressure, pushing the pair down to 1.0881. Consolidation below this range will pave the way to 1.0833, thus returning the market under the sellers' control. That is where I will be taking profit. If the EUR/USD moves upward during the European session and there are no bears at 1.0975, which is also quite possible, I advise traders to postpone short positions to the 1.1002 level. Selling there is possible only after unsuccessful consolidation. I will open short positions immediately on the rebound from the 1.1031 high with a target of a downward correction of 30-35 points.
COT report:
In the Commitments of Traders report for March 28th, an increase in both long and short positions was recorded. Considering that nothing interesting happened last week, and the US personal consumption expenditure price index data turned out not as good as economists expected, the Federal Reserve System will likely raise rates again at the next meeting. However, an aggressively-minded European Central Bank, which will undoubtedly continue to actively raise interest rates further, allows the euro buyers to act more aggressively on every significant euro decline against the dollar. Apart from US unemployment data this week, there is nothing interesting, so the euro has every chance to update its March highs. The COT report indicates that non-commercial long positions increased by 7,093 to 222,918, while non-commercial short positions jumped by 6,910 to 77,893. As a result, the total non-commercial net position increased to 145,025 against 144,842. The weekly closing price went up to 1.0896 from 1.0821.
Indicator signals:
Moving Averages
Trading above the 30- and 50-day moving averages indicates a further possible rise in the euro
Please note that the time period and levels of the moving averages are analyzed only for the H1 chart, which differs from the general definition of the classic daily moving averages on the D1 chart.
Bollinger Bands
If the pair declines, the upper band of the indicator at 1.0900 will serve as support.
Description of indicators:
• A moving average of a 50-day period determines the current trend by smoothing volatility and noise; marked in yellow on the chart;
• A moving average of a 30-day period determines the current trend by smoothing volatility and noise; marked in green on the chart;
• MACD Indicator (Moving Average Convergence/Divergence) Fast EMA with a 12-day period; Slow EMA with a 26-day period. SMA with a 9-day period;
• Bollinger Bands: 20-day period;
• Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements;
• Long non-commercial positions represent the total number of long positions opened by non-commercial traders;
• Short non-commercial positions represent the total number of short positions opened by non-commercial traders;
• The non-commercial net position is the difference between short and long positions of non-commercial traders.