In my morning forecast, I drew attention to the level of 1.0784 and recommended making entry decisions based on it. Let's look at the 5-minute chart and analyze what happened there. The rise and the formation of a false breakout at 1.0784 allowed for a sell signal on the euro, but there was no significant downward movement. As a result, the decision was made to exit the market and reassess the technical picture for the second half of the day.
To open long positions on EUR/USD, the following conditions are required:
Considering that there are no relevant statistics during the American session and no planned speeches by Federal Reserve representatives, buyers have a good chance to increase their advantage even further. However, I will take my time with purchases since we are near weekly highs. It would be better to wait for a decrease in EUR/USD and a false breakout around the new support level of 1.0767, which formed during the first half of the day. The level is also supported by moving averages that favor buyers, providing an opportunity to enter long positions with the goal of growth towards the level of 1.0800. Breaking and testing this range from top to bottom is necessary for buyers, as it will strengthen the demand for the euro, creating an additional entry point for increasing long positions early in the week with a target of around 1.0830. The ultimate target remains in the area of 1.0870, where I will take profits.
In the case of a decline in EUR/USD and the absence of buyers at 1.0767, pressure on the euro will return. Therefore, only the formation of a false breakout around the next support level of 1.0734, today's low, will provide a signal to buy the euro. I will open long positions only on a rebound from 1.0705 with the goal of an upward correction of 30-35 points within the day.
To open short positions on EUR/USD, the following conditions are required:
The bears lost all their advantage from Friday, and now I will rely only on the new resistance level of 1.0800. As mentioned above, there are no fundamental statistics, which, combined with the unsuccessful consolidation at the weekly high, can favor sellers. However, considering the bullish market with sales in the second half of the day, it is better to take your time. I will act only after an unsuccessful consolidation above the resistance level of 1.0800. A false breakout at this level will provide a sell signal capable of pushing the pair back to 1.0767, where the moving averages supporting bulls are located. Consolidation below this range and a reverse test from bottom to top will lead directly to 1.0734. The ultimate target will be around 1.0705, where I will take profits.
In the case of upward movement of EUR/USD during the American session and the absence of bears at 1.0800, the demand for the euro will only increase, potentially leading to a more powerful surge in the pair. In this case, I will postpone short positions until the new resistance level of 1.0830. Selling can be done there, but only after an unsuccessful consolidation. I will open short positions immediately on a rebound from the high of 1.0870 with the goal of a downward correction of 30-35 points.
In the COT (Commitment of Traders) report for May 30, there was a reduction in both long and short positions. Long positions decreased significantly, confirming a decrease in demand for risky assets. Concerns about the slowdown of the European economy and the onset of a recession, along with the continuation of an aggressive policy by the European Central Bank, despite the first signs of a slowdown in core inflationary pressures, are currently discouraging investors from buying euros and forcing them to adopt a wait-and-see position. Meanwhile, the U.S. labor market continues to show strength, so after the pause in June, the Federal Reserve will most likely continue to raise interest rates, thereby maintaining demand for the dollar. According to the COT report, non-commercial long positions decreased by 8,253 to 241,817, while non-commercial short positions decreased by 242 to 76,092. As a result, the overall non-commercial net position decreased to 163,054 from 185,045. The weekly closing price decreased to 1.0732 from 1.0793.
Indicator signals:
Moving Averages
Trading occurs above the 30-day and 50-day moving averages, indicating a likelihood of euro growth.
Note: The author considers the period and prices of the moving averages on the hourly H1 chart, which differs from the general definition of classical daily moving averages on the daily D1 chart.
Bollinger Bands
In the case of growth, the upper boundary of the indicator around 1.0770 will act as resistance.
Description of Indicators:
• Moving Average (determines the current trend by smoothing out volatility and noise). Period 50. Marked in yellow on the chart.
• Moving Average (determines the current trend by smoothing out volatility and noise). Period 30. Marked in green on the chart.
• MACD Indicator (Moving Average Convergence/Divergence) - 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 using the futures market for speculative purposes and meeting 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.
• The overall non-commercial net position is the difference between non-commercial traders' short and long positions.