Yesterday, several entry signals were made. Let's look at the 5-minute chart to get a picture of what happened. I considered entering the market from the 1.1000 level. Growth and a false breakout through 1.1000 generated an excellent sell signal, which resulted in a fall of almost 30 pips. In the second half of the day, the bulls created an entry point at around 1.0944, and the pair increased by more than 30 pips.
When to open long positions on EURUSD:
The euro has faced some pressure ahead of US inflation as this data is able to change market sentiment. We will talk about this macro report in detail in the forecast for the second half of the day. Figures for the German consumer price index have already been released. The result came in line with economists' expectations. Bundesbank representatives Balz and Wuermeling will deliver speeches today.
With the euro trading lower, buyers count on a bullish reaction to the US data. In my opinion, it will be wiser to buy on a correction from support at 1.0944, which has proven its strength several times. A false breakout there will create a buy entry point with the target at 1.0973, which is in line with the moving averages. A breakout and a downside test of this range, after the Bundesbank representatives speak, will likely boost demand for the euro and create an additional buy entry point, targeting a high of 1.1000. The most distant target remains standing in the area of 1.1029, where I am going to lock in profits.
In the case of a decline in EUR/USD and the absence of buyers at 1.0944, which is also quite possible, buyers will lose control over the market entirely. This will mark the beginning of a bearish trend. Only a false breakout through the next support level of 1.0911 will make a signal to buy the euro. I will open long positions immediately on a bounce from the 1.0867 low, allowing an upward correction of 30-35 pips intraday.
When to open short positions on EURUSD:
An important task for sellers today is to protect intermediate resistance at 1.0973. The price is currently trading near this mark. Only a false breakout through this level, along with weak data, will give a sell signal, targeting 1.0944. After consolidation below this range, as well as its upside retest, the price will head toward 1.0911. The most distant target is seen at a low of 1.0867, where I am going to lock in profits.
In case of growth in EUR/USD during the European session and the absence of sellers at 1.0973, buyers will attempt to regain control over the market and stop the downtrend. Therefore, I am going to open short positions from 1.1000 after failed consolidation. I will also open short positions immediately on a bounce from the 1.1029 high, allowing a downward correction of 30-35 pips.
The COT report for May 2 logged an increase in long positions and a decrease in short positions. This report does not yet account for significant changes that took place in the market after the Federal Reserve and European Central Bank meetings last week. So, traders should not focus on it too much. Both central banks raised rates by 0.25%, maintaining market balance while allowing risk asset bulls to expect further growth. There is no important data this week, so traders can relax a bit. According to the COT report, non-commercial long positions grew by 3,316 to 246,832, and non-commercial short positions dropped by 773 to 73,343. As a result, the overall non-commercial net position increased to 173,489 from 144,956, recorded a week before. The weekly closing price dropped to 1.1031 from 1.1039.Indicators' signals:
Moving averages:
Trading is carried out in the area of the 30-day and 50-day moving averages, which indicates a sideways trend.
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:
Support stands at 1.0944, in line with the lower band.
Description of indicators
Moving average (MA) determines the current trend by smoothing volatility and noise. Period 50. Colored yellow on the chart.Moving average (MA) determines the current trend by smoothing volatility and noise. Period 30. Colored green on the chart.Moving Average Convergence/Divergence (MACD). Fast EMA 12. Slow EMA 26. SMA 9.Bollinger Bands. Period 20Non-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 are the total long position of non-commercial traders.Non-commercial short positions are the total short position of non-commercial traders.Total non-commercial net position is the difference between the short and long positions of non-commercial traders.