In my morning forecast, I drew attention to the level of 1.0972 and recommended making decisions about entering the market from it. Let's look at the 5-minute chart and figure out what happened there. The growth and formation of a false breakout at this level allowed us to get a signal for selling the euro, which resulted in a drop of only 10 points at the time of writing the article. Due to the lack of statistics and low trading volatility, the situation in the second half of the day is likely to stay the same. From a technical point of view, everything still needs to be revised, as was the action plan.
Requirements for opening long positions on EUR/USD:
The absence of US statistics and speeches by representatives of the Federal Reserve System - that's all that awaits us in the second half of the day. Interviews with FOMC members Michael S. Barr and Mary Daly are expected. Also, Loretta Mester and Raphael Bostic will give speeches, attracting much more attention. Given that they will be preparing markets for the July meeting, we may hear something new that will limit the upward potential of the pair.
For this reason, I prefer to continue acting on the pair's decline. The formation of a false breakout around the morning support of 1.0933, around which the moving averages are passing, playing on the side of buyers, will give a buy signal capable of returning the pair to the resistance of 1.0972, which withstood the pressure of buyers once again. This once again proves the fact that a lot depends on this level. Only dovish comments by Fed representatives will allow to break out of this range. A breakthrough and a top-down test of 1.0972 will strengthen demand for the euro, giving it a chance to return to the maximum of 1.1010. The ultimate target remains the area of 1.1060, where I will fix the profit. If the EUR/USD declines and there are no buyers at 1.0933 in the second half of the day, pressure on EUR/USD will increase. Therefore, only the formation of a false breakout in the area of the next support 1.0902 will give a signal to buy the euro. I will open long positions immediately on the rebound from the minimum of 1.0871, with the target of an upward correction of 30-35 points within the day.
Requirements for opening short positions on EUR/USD:
Sellers showed themselves, but the interest in the euro was maintained. As long as trading is conducted below 1.0972, a further fall of the pair can be expected, and another form of a false breakout will be evidence of the presence of large buyers in the market. This will also signal to sell with the prospect of a decrease in EUR/USD to the support of 1.0933, which recently served as resistance. Consolidation below this range and a reverse test from the bottom up is a straight road to 1.0902. The ultimate target will be the area of 1.0871, where I will fix the profit.
In the event of an upward movement of EUR/USD during the American session and the absence of bears at 1.0972, which cannot be ruled out on the third consecutive test, bulls will try to build a new upward trend. In this case, I will postpone short positions until the next resistance of 1.1010. One can sell, but only after a failed consolidation. I will open short positions immediately on a rebound from the maximum of 1.1060 with a target of a downward correction of 30-35 points.
The June 27th COT report (Commitment of Traders) saw a reduction in long and short positions, leaving the balance of power in the market virtually unchanged. The US GDP data released last week once again confirmed the resilience of the American economy in the face of high-interest rates, allowing the Federal Reserve to continue its active fight against high inflation, which is gradually returning to normal. The minutes of the FOMC meeting will be released soon, as well as the state of the US labor market, which may strengthen the position of the US dollar against the euro. The optimal medium-term strategy in the current conditions remains buying on declines. The COT report states that non-commercial long positions decreased by 5,422 to 223,977, while short non-commercial positions fell by 5,801 to 78,949. The overall non-commercial net position rose slightly to 145,028 compared to 144,025. The weekly closing price rose to 1.1006 from 1.0968.
Indicator signals:
Moving Averages
Trading above the 30 and 50-day moving averages, indicating further pair growth.
Note: The author considers the period and prices of moving averages on the hourly chart H1 and differ from the general definition of classic daily moving averages on the daily chart D1.
Bollinger Bands
In the case of growth, the upper border of the indicator at 1.0972 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 - convergence/divergence of moving averages) 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, that use the futures market for speculative purposes and meet certain requirements.
• Long non-commercial positions represent the total open long position of non-commercial traders.
• Short non-commercial positions represent the total open short position of non-commercial traders.
• The total non-commercial net position is the difference between non-commercial traders' short and long positions.