In my morning forecast, I focused on the level of 1.0956 and planned to make entry decisions based on it. Let's look at the 5-minute chart and analyze what happened there. There was a drop, but it fell just a couple of points short of a false breakout and the formation of an entry point. So, the entire story is now being transferred to the American session, like yesterday. There have been no revisions to the technical outlook for the second half of the day.
To open long positions on EUR/USD, the following conditions are required:
The absence of significant fundamental statistics has once again impacted the market. However, statements by ECB President Christine Lagarde exerted slight pressure on risky assets. Futures market traders have revised their expectations for the number of rate cuts by the European regulator upwards, now expecting at least six. Ahead of us is the US Producer Price Index. While it may not be as important as consumer inflation data, it is still worth paying attention to this indicator. A decrease in prices will weaken the dollar and lead to a more active recovery of the euro, while a sharp rise in prices, similar to yesterday, could bring the pressure back to the pair, which is what I plan to take advantage of. In the event of a return in price pressure, I will only act after forming a false breakout around the nearest support at 1.0956. This will provide a suitable entry point and lead to an upward movement towards 1.0996. Breaking and updating this range from top to bottom will define the development of a bullish scenario, providing an opportunity for buying with a target of 1.1035. The ultimate target will be the maximum at 1.1076, where I will take a profit. However, such a scenario is possible only in the case of a very strong decrease in inflation in the US. In the scenario of a decline in EUR/USD and no activity at 1.0956 in the second half of the day, the pressure on the pair will increase. In such a case, I plan to enter the market only after forming a false breakout around the previous week's low, at 1.0912. I will open long positions on a rebound starting from 1.0879, with the target of an upward correction of 30-35 points within the day.
To open short positions on EUR/USD, the following conditions are required:
While trading occurs within a sideways channel, the chances of the euro falling are quite high. For this to happen, another inflationary surge in the US at the end of last year is needed, which will delay the Federal Reserve's plans to lower interest rates and strengthen the dollar's position. In the event of a bullish reaction to the data, only the formation of a false breakout around 1.0996 will indicate the presence of sellers in the market and lead to a downward movement towards 1.0956, where the moving averages are located. After breaking and settling below this range and a bottom-up retest, I expect to get another entry point at 1.0912. The defense of this level will be the last hope for buyers. The ultimate target will be the minimum at 1.0879, where I will take a profit. In the event of an upward movement in EUR/USD in the second half of the day after a series of US statistics and the absence of bears at 1.0996, demand for EUR/USD will return, along with the chances of building an upward trend. In this case, I will postpone selling until testing the next resistance at 1.1035. I will also sell there, but only after an unsuccessful consolidation. I plan to open short positions on a rebound starting at 1.1076 with the target of a downward correction of 30-35 points.
Indicator Signals:
Moving Averages:
Trading occurs around the 30 and 50-day moving averages, indicating a sideways market.
Note: The period and prices of the moving averages considered by the author are on the H1 hourly chart and differ from the general definition of classical daily moving averages on the D1 daily chart.
Bollinger Bands:
In case of a decline, the lower boundary of the indicator at around 1.0950 will serve as support.
Description of Indicators:
• Moving average (averages volatility and noise to determine the current trend). Period 50. Marked in yellow on the chart.
• Moving average (averages volatility and noise to determine the current trend). Period 30. Marked in green on the chart.
• MACD Indicator (Moving Average Convergence/Divergence — measures the convergence and divergence of moving averages). Fast EMA period 12. Slow EMA period 26. SMA period 9.
• Bollinger Bands (Bollinger Bands indicator). Period 20.
• Non-commercial traders - speculators, such as individual traders, hedge funds, and large institutions, use the futures market for speculative purposes and are subject to specific requirements.
• Long non-commercial positions represent the total long open positions of non-commercial traders.
• Short non-commercial positions represent the total short open positions of non-commercial traders.
• The net non-commercial position is the difference between non-commercial traders' short and long positions.