Yesterday, there were several entry points. Now, let's look at the 5-minute chart and figure out what actually happened. In my morning article, I turned your attention to 1.0997 and recommended making decisions with this level in focus. A rise and a false breakout of this level led to a sell signal, but the pair did not fall much. In the afternoon, a false breakout at 1.0970 was the ideal buy signal, but the pair went up only about 20 pips, afterwards the euro was under pressure again.
For long positions on EUR/USD:
Federal Reserve Chairman Jerome Powell's statement that rates will rise after a brief pause earlier this summer has cooled down the ardor of euro buyers, which led to a correction and so the pair's likely to trade in the sideways channel. Today we are waiting for the speech of European Central Bank President Christine Lagarde, who is likely to reiterate everything she said a week earlier. That should give confidence to euro buyers, allowing them to protect the lower band of the 1.0911 sideways channel. Good news regarding the eurozone Services PMI will surely be offset by bad news on the Manufacturing PMI.
In that case, I will go long on a decline from the nearest support level at 1.0911, which is the lower band of the sideways channel. A false breakout there will create a buy signal, and the pair could go back up and take the middle at 1.0961, which is in line with the bearish moving averages. A breakout and a downward retest of this level will boost demand for the euro, pushing it to a monthly high of 1.1010. 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 1.0911, the pressure on the pair will increase at the end of the week. Therefore, only a false breakout of the support level of 1.0862 will create new entry points into long positions. You could buy EUR/USD at a bounce from 1.0818, keeping in mind an upward intraday correction of 30-35 pips.
For short positions on EUR/USD:
The bears were active around 1.1000 and today a lot will depend on the eurozone macro data, which could make life even more difficult for the bulls. In case we receive good readings on the eurozone Composite PMI, protecting the new resistance level at 1.0961 will be a priority. I will go short on this mark after a false breakout. It may give a sell signal, pushing EUR/USD to the lower band of the 1.0911 channel. A decline below this level as well as an upward retest could trigger a downward movement to 1.0862. A more distant target will be the 1.0818 level where I recommend locking in profits.
If EUR/USD rises during the European session and bears fail to protect 1.0961, which is likely to be the case, the pair will trade within the sideways channel, while volatility may sharply decrease by the end of the week. In this case, I would advise you to postpone short positions until a false breakout of the resistance level of 1.1010. You could sell EUR/USD at a bounce from 1.1060, 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 below the 30 and 50-day moving averages, which shows that the euro might be under pressure again.
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.