Yesterday, there was only one entry point. Now, let's look at the 5-minute chart and figure out what actually happened. Earlier, I asked you to pay attention to the level of 1.0897 to decide when to enter the market. A rise and false breakout on this mark after the weak eurozone PMI produced a sell signal. As a result, the euro fell by more than 30 pips. In the second half of the day, the pair mostly traded in the sideways channel, but after the release of the Fed minutes the euro was under pressure.
For long positions on EUR/USD:
A clear signal that the Federal Reserve intends to keep raising interest rates, which came from yesterday's minutes of the Open Market Committee meeting, had a positive effect on the U.S. dollar's position against the euro. Earlier in the day, we will receive reports on industrial orders in Germany and retail sales in the euro area. These reports are unlikely to be of much help that's why I expect the euro to fall further ahead of important US data. Joachim Nagel, a member of the ECB's Governing Council will give a speech. He will likely show the same stance, so not much will change here either.
In case EUR/USD falls amid disappointing figures, I will only act on declines at the support level of 1.0817. That will provide a buy signal, allowing a return to the key resistance at 1.0863, which is in line with the bearish moving averages. A lot depends on that mark. A good eurozone retail sales report will take the pair beyond this range. A breakout and a downward retest of this mark will strengthen demand for the euro and may bring it to 1.0900. The ultimate target remains the area of 1.0933 where I will take profit.
In the case of a decline in EUR/USD and the absence of buyers at 1.0817, bears may increase their presence. Therefore, only the formation of a false breakout around the next support at 1.0777 will provide a buy signal for the euro. I will open long positions immediately on a rebound from the low of 1.0734, keeping in mind an intraday upside correction of 30-35 pips.
For short positions on EUR/USD:
Sellers have the upper hand, and now their main task is to protect the new resistance level at 1.0863. A false breakout at this level is likely to give a sell signal that could push EUR/USD to the support level of 1.0817. Consolidation below this level as well as an upward retest could trigger a fall to 1.0777, a new low, where sellers will already face strong levels. The ultimate target will be the low of 1.0734 where I will take profit. Testing this area will indicate the formation of a new bearish bias.
In the event of an upward movement of EUR/USD during the European session and the absence of bears at 1.0863, which is possible only if we receive good reports, the bulls will try to restore market equilibrium. In such a case, I will postpone short positions until the pair hits the next resistance at 1.0900. Selling can also be done there but only after a failed consolidation. I will open short positions immediately on a rebound from the high of 1.0933, considering a downward correction of 30-35 pips.
COT report:
The COT report for June 27 showed a reduction in both long and short positions, leaving the market's balance practically unchanged. The GDP data released last week once again confirmed the resilience of the American economy even in the face of high interest rates, allowing the Federal Reserve to actively combat high inflation which is gradually returning to normal. In the near future, the minutes of the Fed's meeting will be released, and we will also learn about the state of the US labor market, which may strengthen the US dollar against the euro. In the current conditions, buying on pullbacks remains the optimal medium-term strategy. The COT report indicates that long positions of the non-commercial group of traders decreased by 5,422 to 223,977 while short positions fell by 5,801 to 78,949. At the end of the week, the overall non-commercial net position increased slightly to 145,028 compared to 144,025. The weekly closing price went up to 1.1006 from 1.0968.
Indicator signals:
Moving Averages
Trading is carried out below the 30 and 50 daily moving averages, which indicates further decline.
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 1.0840 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.