Yesterday, there was only one entry signal. Now, let's look at the 5-minute chart and figure out what actually happened. In my morning article, I turned your attention to 1.0933 and recommended making decisions with this level in focus. A rise and a false breakout of this level led to a sell signal, which resulted in a drop of only 20 pips. In the afternoon, there were no signals to enter the market.
For long positions on EUR/USD:
The euro continued to rise after the speech of Federal Reserve Chairman Jerome Powell. He didn't exactly say anything surprising, and traders expected a bullish scenario for EUR/USD. Today, the European Central Bank represented by ECB Executive Board member Fabio Panetta and ECB board member Joachim Nagel are expected to give another interview. We are already aware that politicians will support ECB President Christine Lagarde's plans to fight inflation by betting on a further increase in the cost of borrowing in the eurozone, which will definitely support the euro on its way to break through the 1.1000 level. The eurozone consumer confidence indicator will not be of much significance as experts do not project drastic changes in June.
Like yesterday, I will go long on a decline from the nearest support level at 1.0956, which is in line with the bullish moving averages. A false breakout there will create a buy signal, and the pair could go back up, and the resistance level will be updated at 1.0997. A breakout and a downward retest of this level will boost demand for the euro, pushing it to a monthly high of 1.1029. A more distant target will be the 1.1060 level where I recommend locking in profits. If EUR/USD declines and bulls fail to defend 1.0956, the demand for the euro will be very weak. Therefore, only a false breakout of the support level of 1.0911 will create new entry points into long positions. You could buy EUR/USD at a bounce from 1.0862, keeping in mind an upward intraday correction of 30-35 pips.
For short positions on EUR/USD:
Sellers capitulated, and today their hopes are dwindling. The divergent policies of the Fed and the ECB, as well as aggressive statements from European officials regarding further inflation fighting measures, maintain demand for the euro, which is used by the big players. The only thing the bears can do is to protect the new resistance level at 1.0997. I will go short on this mark after a rise and a false breakout. It may give a sell signal, pushing EUR/USD to a major support level at 1.0956, formed yesterday. A decline below this level as well as an upward retest could trigger a downward movement to 1.0911. A more distant target will be the 1.0862 level where I recommend locking in profits.
If EUR/USD rises during the European session and bears fail to protect 1.0997, the bullish trend will continue. In this case, I would advise you to postpone short positions until a false breakout of the resistance level of 1.1029. You could sell EUR/USD at a bounce from 1.1029, keeping in mind a downward intraday correction of 30-35 pips.
COT report:
According to the COT report (Commitment of Traders) for June 13, there was a drop in long and short positions. However, this report was released even before the Federal Reserve's decision on the interest rate. The regulator decided to skip a rate hike in June this year, which significantly affected market sentiment. For this reason, one should not pay too much attention to the report. Demand for the euro remains high as the ECB remains committed to aggressive tightening. The euro is likely to maintain a bullish bias. The best medium-term strategy is to go long on the decline. The COT report showed that long non-commercial positions decreased by 9,922 to 226,138, while short non-commercial positions fell by 3,323 to 74,316. At the end of the week, the total non-commercial net position dropped and amounted to 151 822 against 158 224. The weekly closing price increased and amounted to 1.0794 against 1.0702.
Indicator signals:
Moving Averages
Trading is carried out above the 30 and 50-day moving averages, which indicates the pair's growth.
Please note that the time period and levels of the moving averages are analyzed only for the H1 chart, which differs from the general definition of the classic daily moving averages on the D1 chart.
Bollinger Bands
If the pair falls, the lower band of the indicator at 1.0925 will act as support.
Description of indicators:
• A moving average of a 50-day period determines the current trend by smoothing volatility and noise; marked in yellow on the chart;
• A moving average of a 30-day period determines the current trend by smoothing volatility and noise; marked in green on the chart;
• MACD Indicator (Moving Average Convergence/Divergence) Fast EMA with a 12-day period; Slow EMA with a 26-day period. SMA with a 9-day period;
• Bollinger Bands: 20-day period;
• Non-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 represent the total number of long positions opened by non-commercial traders;
• Short non-commercial positions represent the total number of short positions opened by non-commercial traders;
• The non-commercial net position is the difference between short and long positions of non-commercial traders.