Yesterday, there were several excellent entry points. Let's look at the 5-minute chart and figure out what actually happened. In my morning forecast, I turned your attention to the level of 1.1242 and recommended making decisions with this level in focus. A false breakout of this level gave a sell signal, which resulted in a downward movement of over 30 pips. In the afternoon, safeguarding and a false breakout of 1.1206 led to a buy signal, which resulted in an upward movement of another 30 pips or so.
COT report:
According to the COT report (Commitment of Traders) for July 11, there was an increase in long and short positions, which left the balance of power in the market almost unchanged in favor of the euro bulls. Weaker-than-expected US inflation data had a strong impact on the buyers. As a result, not only did the euro rally but it also renewed annual highs and the pair went beyond the psychological mark of 1.1000, which it could hardly reach for almost half a year. The fact that the Federal Reserve no longer needs to raise interest rates makes the USD quite weak. As long as the market is bullish, the medium-term strategy in the current conditions is to go long on the decline. The COT report showed that long non-profit positions rose by 3,709 to 223,351, while short non-profit positions jumped by 5,754 to 84,189. At the end of the week, the total non-commercial net position slightly slid and amounted to 140,162 against 142,837. The weekly closing price came in at 1.1037 against 1.0953.
For long positions on EUR/USD:
There is no economic data scheduled in the EU calendar on Tuesday. Traders can focus on the US retail sales report and other smaller data, which we will talk about in the forecast for the US session. Alongside no significant economic data, the bulls have the chance to be in control and extend the uptrend. It is better to open positions at the support of 1.1242 formed yesterday. A false breakout of this level will give a buy signal. The pair is likely to jump to the resistance level of 1.1276. A breakout and a downward retest of this level will bolster demand for the euro, pushing it to 1.1310. A more distant target remains the 1.1350 level where I recommend locking in profits. This will extend the uptrend.
If EUR/USD declines and bulls fail to defend 1.1242, which is in line with the bullish moving averages, the bears may become active in hopes of building a downward correction. Therefore, only a false breakout of the support level of 1.1206 may create entry points into long positions. You could buy EUR/USD at a bounce from the 1.1164 low, keeping in mind an upward intraday correction of 30-35 pips.
For short positions on EUR/USD:
Given that the bulls are becoming more active, there is little chance of a bearish correction today. Only an outstanding report could provide help. Sellers need to protect the new resistance level of 1.1276. Otherwise, the bullish bias will persist. A false breakout on this mark will provide a sell signal with the prospect of pushing EUR/USD to 1.1242. A lot depends on this level, as falling below this mark may attack several stop orders. A breakout and consolidation below this level as well as an upward test could push the pair to 1.1206. A more distant target will be the 1.1164 level where I recommend locking in profits. If EUR/USD rises during the European session and bears fail to protect 1.1276, which is more likely given the uptrend, the bulls will continue to control the market. In this case, I would advise you to postpone short positions until a false breakout of the resistance level of 1.1310. You could sell EUR/USD at a bounce from 1.1350, keeping in mind a downward intraday correction of 30-35 pips.
Indicator signals:
Moving averages:
Trading is carried out above the 30-day and 50-day moving averages, which indicates a further rise.
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
If EUR/USD declines, the indicator's lower border at 1.1230 will serve as support. If EUR/USD rises, the indicator's upper border at 1.1252 will serve as resistance.
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.