In my morning forecast, I drew attention to the level of 1.0944 and recommended entering the market from this point. Let's look at the 5-minute chart and figure out what happened there. The formation of a false breakout at this level led to an entry point for buying the euro. However, the upward movement never happened, which led to the fixation of losses. The technical picture was not significantly reviewed for the second half of the day.
To open long positions on EURUSD, it is necessary:
Since nobody wants to buy the euro, it needs to be sold. This is how large players acted, convinced that no one was willing to enter long positions after yesterday's unsuccessful surge of the pair upwards. For the second half of the day, several US data are planned, which will be able to knock down EUR/USD to the next support at 1.0911. A decrease in the number of initial applications for unemployment benefits and an increase in the US producer price index in April of this year will certainly increase pressure on the pair, as will a speech by FOMC member Christopher Waller. For this reason, I will open long positions in the euro only after forming a false breakout around the level of 1.0911. This will lead to a buy signal with growth to resistance at 1.0944, which served as support in the morning. A breakthrough and top-down test of this range will strengthen buyers' confidence, which will return the bullish sentiment to the pair and form an additional entry point for increasing long positions with the update of the level of 1.0971. The farthest target will be the area of 1.0998, where I will fix the profit.
With a further decrease in EUR/USD and the absence of buyers at 1.0911, which is quite possible in such a market, the pressure on the euro will only increase, leading to a new bearish trend. In this case, only a false breakout in the next support area at 1.0878 will be a reason to buy the euro. I will open long positions on EUR/USD immediately on the rebound from the minimum of 1.0834, or even lower - in the area of 1.0792 with the goal of an ascending correction of 30-35 points within the day.
To open short positions on EURUSD, it is necessary:
Sellers continued to push the pair lower and lower without any particular problems, with 1.0944 in the first half of the day. The entire focus is on American statistics and the level of 1.0944, which now acts as resistance. I would like to see a rise in that labor market statistics, which will give bears a new chance for defense and the formation of a false breakout around this range. This will also form a good entry point into short positions with the prospect of updating 1.0911. Fixation below this range and a reverse test from bottom to top is a straight road to 1.0878. The farthest target will be the minimum of 1.0834, where I will fix the profit.
In the event of an upward movement of EUR/USD during the American session and the absence of bears at 1.0944, which, considering the nature of the market, is now unlikely, I will postpone short positions to the level of 1.0971, where the moving averages are, playing on the side of the bears. I will also sell there only after unsuccessful consolidation. I plan to open short positions immediately on a rebound from a maximum of 1.0998 with a target of a downward correction of 30-35 points.
The COT report (Commitment of Traders) for May 2nd showed continued growth in long positions and reduced short ones. It should be noted that this report still needs to consider serious changes that occurred in the market after the meetings of the Federal Reserve System and the European Central Bank last week, so it is not worth paying special attention to it. Interest rates were raised by 0.25% by both central banks, which, while maintaining market equilibrium, also allowed buyers of risk assets to count on their further growth. There are no important statistics this week, so traders will be able to exhale and relax a bit. The COT report shows that non-commercial long positions grew by 3,316 to 246,832, while non-commercial short positions fell by 773 to 73,343. As a result of the week, the total non-commercial net position grew and amounted to 173,489 against 144,956 a week earlier. The weekly closing price decreased and amounted to 1.1031 against 1.1039.
Indicator signals:
Moving averages
Trading is conducted below 30 and 50-day moving averages, which indicates a further decline in the pair.
Note: The author considers the period and prices of moving averages on the hourly chart H1 and differ from the general definition of classical daily moving averages on the daily chart D1.
Bollinger Bands
In case of an increase, the upper border of the indicator around 1.1000 will act as resistance.
Description of indicators
• Moving average (determines the current trend by smoothing volatility and noise). Period 50. Marked in yellow on the chart.
• Moving average (determines the current trend by smoothing volatility and noise). Period 30. Marked in green on the chart.
• MACD indicator (Moving Average Convergence / Divergence - convergence/divergence of moving averages) Fast EMA period 12. Slow EMA period 26. SMA period 9
• Bollinger Bands. Period 20
• Non-commercial traders - speculators, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
• Non-commercial long positions represent the total long open position of non-commercial traders.
• Non-commercial short positions represent the total short open position of non-commercial traders.
• The total non-commercial net position is the difference between the short and long positions of non-commercial traders.