Yesterday, there was only one entry point. Now, let's look at the 5-minute chart and figure out what actually happened. In my morning article, I turned your attention to 1.1030 and recommended making decisions with this level in focus. The euro declined slightly but before a false breakout at this level. It lacked a few pips. A similar situation occurred at the resistance level of 1.1066. After a fall in the afternoon, the bulls managed to protect the support level of 1.0998, which I mentioned in my forecast. It led to a buy signal and a rebound in the pair by more than 30 pips.
When to open long positions on EUR/USD:
Given the sharp market reaction to US GDP data for the first quitter, it is quite hard to predict what to expect after the release of inflation data. We will discuss it in more detail in my forecast for the European session. Now, let's talk about the Eurozone's GDP for the first quarter. The reading is projected to be strong. If so, it will help the euro recover. If GDP figures disappoint market participants, the pressure on the pair will only increase at the end of the month. Besides, the euro will hardly be able to reach new highs today. Do not forget about Germany's reports on the labor market.
For this reason, I am unwilling to open long positions now. A rise and a false breakout of 1.0995 will provide new entry points into long positions with a jump to the resistance level of 1.1031. At this level, the moving averages that are benefiting bears are passing. So, a breakout and a downward retest of this level will boost a bull market, giving an additional entry point into long positions. The pair may grow to a high of 1.1063. A more distant target will be the 1.096 level where I recommend locking in profits.
If EUR/USD declines and bulls show no activity at 1.0995, which is quite likely as data on the Eurozone's GDP may undershoot estimates, a downward movement may occur. Yesterday, a similar situation happened after the release of US macro stats. The pair faced strong bearish pressure. Only a false breakout of the support level of 1.0966 will give a buy signal. You could open long positions at a bounce from the low of 1.0941, keeping in mind an upward intraday correction of 30-35 pips.
When to open short positions on EUR/USD:
Sellers continue to control the market, preventing the pair from returning to monthly highs. A positive market reaction to the Eurozone's GDP data is quite possible but bears could use this as a chance to enter short positions at more attractive prices. Therefore, bears need to protect the resistance level of 1.1031 where the moving averages are passing. A negative reaction to the eurozone data as well as a false breakout of this level will create a sell signal. The pair may take a nosedive to 1.0995, a new support level formed yesterday. A decline below this level as well as an upward retest may trigger a decrease to 1.0966. A more distant target will be the 1.0941 level, which is the last week's low. At this level, I recommend locking in profits.
If EUR/USD rises during the European session and bears show no energy at 1.1031, bulls will probably try to continue yesterday's movement that occurred in the morning. In this case, I would advise you to postpone short positions until a false breakout of 1.1063. Yesterday, traders managed to lock in profits from selling in the morning. You could sell EUR/USD at a bounce from 1.096, keeping a downward intraday correction of 30-35 pips.
COT report:
The COT report (Commitment of Traders) for April 11 logged a rise in long positions and a drop in short ones. The latest US economic reports signaled a gradual overheating of the labor market as well as a decline in retail sales. It is likely to ease inflationary pressure in the United States, allowing the Fed to end the tightening cycle. However, according to the meeting minutes for March, Fed policymakers are not planning to abandon aggressive tightening. At the May meeting, the regulator could raise the key rate by 0.25%. It will help the US dollar maintain its lead against the euro, trading below 1.1000. This week, there will be no crucial economic reports, excluding PMI data. So, the bears could facilitate the downward correction. The COT report showed that long non-commercial positions increased by 18,764 to 244,180, while short non-commercial positions declined by 1,181 to 80,842. At the end of the week, the total non-commercial net position amounted to 162,496 against 143,393. The weekly closing price fell to 1.0950 against 1.1.
Indicators' signals:
Trading is carried out below the 30 and 50 daily moving averages, which indicates a bearish bias.
Moving averages
Note: The period and prices of moving averages are considered by the author on the H1 (1-hour) chart and differ from the general definition of the classic daily moving averages on the daily D1 chart.
Bollinger Bands
If EUR/USD declines, the indicator's lower border at 1.1005 will serve as support.
Description of indicators
Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked yellow on the chart.Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked 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 9Bollinger Bands (Bollinger Bands). Period 20Non-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 the short and long positions of non-commercial traders.