In my morning forecast, I focused on the 1.0803 level and planned to make market entry decisions based on it. Let's look at the 5-minute chart and analyze what happened there. Growth occurred, but a false breakout did not form, so there was no clear entry signal. Therefore, the technical picture for the second half of the day has been revised.
To open long positions on EUR/USD:
We have much more interesting data ahead that can significantly influence market direction. Expected are the GDP figures for the first quarter of this year, as well as data on initial jobless claims and the US goods trade balance. Naturally, the focus will be on the economy and its growth, which could be revised downward, as indicated by the "Beige Book" data yesterday. If the figures disappoint, euro buyers will have a good chance to continue the growth observed in the first half of the day. Of course, before buying, I would like to see the presence of bulls around the new support level of 1.0810, where I will focus. I plan to open long positions only after false breakout forms, which would be a suitable entry point, aiming for growth and a test of the new resistance at 1.0834, just below which the moving averages, favoring sellers, are located. A breakout and update from top to bottom of this range will strengthen the pair with a chance to return to an upward trend and a surge to 1.0858. The furthest target will be the maximum at 1.0888, where I will take profits. If EUR/USD falls and there is no activity around 1.0810 in the second half of the day, pressure on the market will return, leading to a larger decline to the area of 1.0789 – the weekly minimum. I plan to enter there only after a false breakout form. I plan to open long positions on a rebound from 1.0769 with the aim of a 30-35 point upward correction within the day.
To open short positions on EUR/USD:
Sellers have a chance to regain control of the market, but first, it would be good to assert themselves around the resistance at 1.0834, which is likely to be tested after weak US statistics are released. Only a false breakout there will provide an entry point for new short positions against the trend, with the prospect of reducing the euro and updating the support at 1.0810. This level is very important within the day, so I expect a particular struggle for it. A breakout and consolidation below this range, followed by a retest from bottom to top, will provide another selling point, moving the pair to the 1.0789 minimum area, where I expect to see more active buying. The furthest target will be the minimum at 1.0769, where I will take profits. If EUR/USD moves up in the second half of the day and there are no bears around 1.0834, buyers will manage to regain the market. In this case, I will postpone sales until the next resistance test at 1.0858. I will also sell there, but only after an unsuccessful consolidation. I plan to open short positions immediately on a rebound from 1.0888 with a 30-35 point downward correction target.
The COT report showed an increase in long positions and a decrease in short ones. More active reduction in short positions is due to statements from ECB representatives and their desire to reduce interest rates as soon as possible, giving the Eurozone economy a chance to recover in the second half of the year. This is well-received by buyers of risk assets, even though the chances of seeing a few more rate cuts by the end of the year are quite small. The COT report indicated that non-commercial long positions increased by 4,176, to 182,574, while short non-commercial positions fell by 20,144, to 141,099. As a result, the spread between long and short positions decreased by 35.
Indicator Signals:
Moving Averages:
Trading is below the 30 and 50-day moving averages, indicating further pair decline.
Note: The author considers the period and prices of moving averages on the hourly H1 chart, differing from the general definition of classical daily moving averages on the D1 chart.
Bollinger Bands:
In case of a decline, the lower boundary of the indicator, around 1.0789, will serve as support.
Indicator Descriptions:
Moving average (determines the current trend by smoothing volatility and noise). Period – 50. Marked in yellow on the chart.Moving average (determines the current trend by smoothing 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 long open position of non-commercial traders.Short non-commercial positions represent the total short open positions of non-commercial traders.The total non-commercial net position is the difference between the short and long positions of non-commercial traders.