FX.co ★ EUR/USD: plan for the European session on April 2. COT reports. US Nonfarm employment report can limit euro's succeeding growth. Bears will defend resistance at 1.1798

To open long positions on EUR/USD, you need:

Yesterday morning was much better than the afternoon. Let's take a look at the 5 minute chart and talk about what happened. You can see that after the bears failed to get the pair to settle below support at 1.1715, a false breakout was formed, which leads to creating a good entry point into long positions. After some time, the bulls sought to return to the resistance area of 1.1753, which brings around 35 points of profit. In the afternoon, I advised you to buy the euro when it surpasses and manages to settle above the 1.1753 resistance. And it seems like the bulls managed to create a good entry point, but before the sharp upward movement there was a large movement below 1.1753, which resulted in removing stop orders. There was no desire to open long positions after a second return to the 1.1753 level.

Today is Good Friday in the EU and many European markets are closed. Therefore, volatility and trading volume in the first half of the day will be at a fairly low level. In this regard, in order to prevent false entry points from appearing, I revised my nearest support and resistance levels. Bulls need to push the pair to settle above the 1.1798 level: testing this level from top to bottom can create a signal for you to open long positions in order to continue the euro's upward correction, already in the area of a high like 1.1842, where I recommend taking profits. The next target will be 1.1889, but I do not know what should happen in the market and what the Non-Farm Employment report should be in order for the euro to rise so significantly at the end of the week. In case the pair falls in the first half of the day, the bulls need to think of a way to protect support at 1.1756, just below which are the moving averages that play on their side. Forming a false breakout there will result in creating a good entry point for buying the euro. If the bulls are not active in the 1.1756 area, then it is best to hold back from long positions until a new local low like 1.1715 has been tested, from where you can open long positions immediately on a rebound, counting on an upward correction of 15-20 points within the day.

To open short positions on EUR/USD, you need:

Bears are looking forward to a powerful Non-Farm Employment report in the afternoon and a resumption of the bearish market by the end of the week. To do this, they need to think carefully about how to form a false breakout in the 1.1798 area and protect this area. In such a scenario, you can open short positions with the purpose of falling to the middle of the 1.1756 horizontal channel, on a breakthrough of which the succeeding bull market depends. Being able to settle below 1.1756 with its test from the bottom up can create an excellent signal for you to open new short positions, and the nearest target will be the lower border of the horizontal channel at 1.1715, where I recommend taking profits. If bears are not active at 1.1798 and we receive a disappointing report on the US labor market, then I recommend not to rush into short positions, but instead you should sell EUR/USD for a rebound from the next major resistance at 1.1842, counting on a downward correction of 15-20 points within the day.

The Commitment of Traders (COT) report for March 23 shows that the indicators of long and short positions remained practically unchanged, which indicates a clear lack of willingness to buy euros in the short term. The delta growth was due to a slight decline in short positions, and not because of an influx of new buyers. Traders are now entirely focused on the problems with the EU vaccination program and bureaucratic delays in the implementation of the Recovery Fund - they will be the main reason for the weak growth of the eurozone economy after the Covid-19 pandemic this year, making it lag behind other developed countries. This is reflected in the euro's rate, which continues to lose its positions against the US dollar. For this reason, the market remains on the side of sellers of risky assets, which may lead to forming a succeeding downward trend.

The dollar's position will only strengthen in the event of another round of growth in the yield of ten-year US bonds. Investors expect the United States to be the first to start raising interest rates, which makes the dollar more attractive. At the moment, it is best not to rush into buying euros, but to wait for lower prices. Another factor of medium-term pressure on the euro is the fact that many European countries are in quarantine due to the coronavirus. The recent rollback of social distancing measures has led to new outbreaks of disease in the population, forcing many governments to revert to previous measures. One can expect an improvement in the economic outlook for the eurozone only when restrictions are lifted and the service sector is restored, which will return the medium-term trend of strengthening EUR/USD. The COT report indicated that long non-commercial positions fell to 195,500 from 195,857, while short non-commercial positions fell further from 105,881 to 102,178. As a result, the total non-commercial net position broke its five-week downward trend and slightly rose from 89,976 to 93,332. The weekly closing price was 1.1932 against 1.1926 a week earlier.

Indicator signals:

Moving averages

Trading is carried out above 30 and 50 moving averages, which indicates a possible continuation of the bull market.

Note: The period and prices of moving averages are considered by the author on the H1 chart and differs from the general definition of the classic daily moving averages on the D1 daily chart.

Bollinger Bands

In case the euro falls, support will be provided by the lower border of the indicator in the area of 1.1730. A breakout of the upper border of the indicator in the area of 1.1798 will lead to an upward correction for the pair.

Description of indicators

• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
• MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-commercial speculative traders, 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 position of non-commercial traders.
• Total non-commercial net position is the difference between short and long positions of non-commercial traders.