Yesterday, a few entry signals were generated. Let's look at the 5-minute chart to get a picture of what happened. Previously, I considered entering the market from the level of 1.0924. The price fell to 1.0924 but no false breakout followed due to a lack of bullish activity near this range. In the second half of the day, despite some changes, the pair failed to reach the nearest levels.
When to open long positions on EUR/USD:
Before conducting technical analysis of EUR/USD, let's see how the Commitments of Traders changed. The COT report for June 13 logged a drop in both longs and shorts. The report came before the Fed's rate decision to pause hiking rates, which had a significant impact on the market. Therefore, this particular report does not deserve our special attention. The euro is still in demand due to the ECB's aggressive stance on monetary policy. A medium-term plan would be to buy when the price goes down. According to the COT report, non-commercial long positions decreased by 9,922 to 226,138, while non-commercial short positions fell by 3,323 to 74,316. The overall non-commercial net position dropped to 151,822 from 158,224. The weekly close price rose to 1.0794 from 1.0702.
In the first half of the day, there will be no fundamental factors capable of seriously boosting demand for the euro, so it is still better to act on a decline. The ECB's current account balance and the speech of Vice President Luis de Guindos will help determine a further price direction. For this reason, I will only act around the support level of 1.0900, which was formed on Thursday after the European regulator raised interest rates. A false breakout there will signal to buy the instrument, with the target at the intermediate resistance level of 1.0937. This mark is in line with the bullish moving averages. A breakout and a downside test of this range will contribute to an increase in demand for the euro, pushing the price to 1.0970. The most distant target is seen in the area of 1.1002 where I will lock in profit.
In the event of a decline in EUR/USD and a lack of buyers at 1.0900 amid a lack of important statistics, sellers may trade more actively in anticipation of a downward correction. Therefore, only a false breakout around the next support level of 1.0862 will make a buy signal. I will open long positions only on a rebound from a low of 1.0818, allowing a bullish correction of 30-35 pips intraday.
When to open short positions on EUR/USD:
Volatility and trading volumes are low. After a federal holiday in the US yesterday, the euro may see an increase in demand for the euro. For this reason, to maintain a bearish correction, sellers should defend the nearest resistance at 1.0937, which is in line with the moving averages. If consolidation fails, that will signal a sell-off, potentially pushing EUR/USD toward 1.0900. Consolidation below this range, as well as an upside retest, would result in a fall to 1.0862. The most distant target stands at a low of 1.0818 where I will lock in profit.
If EUR/USD rises during the European session and there are no sellers at 1.0937, the market will reach an equilibrium, and the pair will get stuck in a sideways channel. In such a case, I will open short positions at 1.0970 if consolidation fails. I will sell on a bounce from a low of 1.1002, allowing a bearish correction of 30-35 pips.
Indicator signals:
Moving averages:
Trading is carried out slightly below the 30-day and 50-day moving averages, which indicates the possibility of a bearish continuation.
Note: The author considers the period and prices of moving averages on the H1 (1-hour) chart that differ from the general definition of the classic daily moving averages on the daily D1 chart.
Bollinger Bands
Support stands at 1.0915, in line with the lower band. Resistance is seen at 1.0940, in line with the upper band.
Indicator description:
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.