FX.co ★ EUR/USD: plan for the US session on April 7 (analysis of morning trades)

To open long positions on EURUSD, you need to:

The euro increased in the first half of the day after the release of good indicators on activity in the services sector of the eurozone countries. However, buyers failed to break above the resistance of 1.1893, which I drew attention to in my morning forecast. Let's look at the 5-minute chart and talk about what happened: after two failed attempts to break above 1.1893, the bears achieved the formation of a false breakout, which led to the formation of an excellent entry point into short positions. At the time of writing, the pair has rebounded from the level by 15 points. However, while trading will be conducted below the range of 1.1893, we can expect a larger drop in the euro to the support area of 1.1854.

In this regard, from a technical point of view, nothing has changed, and the strategy remains similar to the morning one. Only a break and consolidation above the resistance of 1.1893 with its reverse test from top to bottom forms a signal to open long positions with the aim of growth to the maximum of 1.1930, where I recommend taking the profit. The next major resistance is seen around 1.1987. Let me remind you that today in the second half of the day the minutes of the Federal Reserve System are published, so we can expect a return of pressure on the EUR/USD pair. But do not forget about the G20 meeting, where very important decisions can be made. If yesterday's upward movement of the euro is not supported by new buyers in the second half of the day, and the pair still shows a decline – it is best not to rush into purchases, but to wait for the formation of a false breakdown in the support area of 1.1854, where the moving averages are playing on the side of buyers. If there is no bull activity in the area of 1.1854, I recommend postponing long positions until the support test of 1.1820, from where you can buy the pair immediately for a rebound in the expectation of an upward correction of 20-25 points within the day.

To open short positions on EURUSD, you need to:

The bears coped with their morning task and did not let the pair go above the resistance of 1.1893. As long as trade remains below this level, the pressure on the euro will continue. The next formation of a false breakout in the area of 1.1893 in the second half of the day forms an additional signal to open short positions to return to the support area of 1.1855, where I recommend taking the profit since there will be quite a big fight for this range. A breakout and consolidation below with a reverse test of the level of 1.1855 from the bottom up - all this forms a good entry point into short positions already to return EUR/USD to the minimum of 1.1820, where I recommend fixing the profits. In the case of a re-growth of the euro during the US session and the lack of activity of sellers in the area of 1.1893, it is best to postpone short positions until the update of a larger maximum of 1.1930, from where you can sell the euro immediately on the rebound in the expectation of a downward correction of 15-20 points within the day.

Let me remind you that in the COT report (Commitment of Traders) for March 30, the indicators of long and short positions have undergone several changes – short positions have grown especially strongly, which indicates that the market remains under the control of the euro sellers. The drop in the delta occurred as a result of a slight decline in long positions and a sharp increase in short positions. European countries continue to be quarantined this spring due to a new strain of coronavirus and a weak vaccination program that was conducted in the winter. This is causing serious damage to the economy and there is already talk among experts that the eurozone's GDP may shrink in the 2nd quarter. Bureaucratic delays in the implementation of the EU recovery fund are another reason for the weak growth of the eurozone economy during the COVID-19 pandemic this year.

For this reason, in the medium term, the market remains on the side of sellers of risky assets, which may lead to further formation of a downward trend. Investors expect the United States to be the first to start raising interest rates, which makes the dollar more attractive. Only after the lifting of restrictions and the recovery of the services sector in the euro area can we expect an improvement in the economic outlook, which will return the trend to the strengthening of the EUR/USD. The COT report shows that long non-profit positions declined to the level of 194,764 from the level of 195,500, while short non-profit positions rose from the level of 102,178 to the level of 121,024. As a result, the total non-profit net position continued its decline again to 73,739 from the level of 93,332 a week earlier. The weekly closing price also fell to 1.1768 against 1.1932 a week earlier.

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 daily moving averages, which indicates the continuation of the euro's growth in the short term.

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

Bollinger Bands

A break of the lower limit of the indicator in the area of 1.1878 will increase the pressure on the euro. A break of the upper limit of the indicator in the area of 1.1893 will lead to a new wave of growth.

Description of indicators

• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
• MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-profit 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 the short and long positions of non-commercial traders.