FX.co ★ EUR/USD: plan for the US session on April 21 (analysis of morning trades)

To open long positions on EURUSD, you need to:

In the first half of the day, nothing happened. Again, against the background of low volatility and the absence of critical fundamental data, the pair failed to approach any of the levels I indicated. Accordingly, there were no signals for entering the market, clearly visible on the 5-minute chart. The second half of the day will most likely be calm and since no important fundamental reports are scheduled during the US session. The fact that the European Central Bank will hold a monetary policy meeting tomorrow further constrains the market.

Due to the low trading volume, I had to revise the nearest support and resistance levels. The initial task of buyers is to form a false breakout in the new support level of 1.2000. Under this condition, you can open long positions in the expectation of recovery of EUR/USD in the second half of the day to the resistance area of 1.2042. The longer-term goal will be the maximum of this week in the area of 1.2079, where I recommend taking the profits. If in the course of US trading we see a breakdown of the support of 1.2000, then I recommend postponing long positions until the new low of 1.1963 is updated, from where you can buy the euro immediately for a rebound in the expectation of an upward correction of 20-25 points within the day. The next significant support is in the area of 1.1924.

To open short positions on EURUSD, you need to:

Sellers are still in control of the market, having achieved its decline in the area of the new support of 1.2000. The main task for the second half of the day is to break through this range, the test of which from the bottom up on the volume will lead to the formation of an excellent signal to open short positions in the continuation of the downward trend to the area of the minimum of 1.1963, where I recommend taking the profits. The region of 1.1924 will be a more distant target. However, it will be pretty challenging to reach this level without severe fundamental reasons. In the case of an upward correction of the pair during the US session, I recommend not to rush to sell: the optimal scenario for opening short positions will be forming a false breakout in the resistance area of 1.2042. You can sell EUR/USD immediately for a rebound only from the maximum of 1.2079, based on a downward correction of 20-25 points within the day.

In the COT report (Commitment of Traders) for April 13, the indicators of long and short positions have undergone many changes – both short and long positions have decreased, which indicates a more cautious approach of traders to the market. It is crucial that long positions continued to decline but at a slower pace, which may signal the end of the bear market. Last week was full of not very good fundamental statistics on the euro area, which turned out to be either worse than economists' forecasts, or coincided with them, which limited the upward potential of the pair. However, talk that the European Central Bank is beginning to think about curtailing the bond repurchase program in the 3rd quarter of this year, forcing investors to look at risky assets, which will favorably affect the position of the European currency in the near future. The news that the vaccination program in the EU countries is beginning to yield results allows us to count on the lifting of restrictions and more active recovery of the eurozone services sector, which will give hope for an improved economic outlook and return the EUR/USD to an upward trend. The COT report indicated that long non-profit positions declined from the level of 192,230 to the level of 190,640.

In contrast, short non-profit positions declined from the level of 124,708 to the level of 123,789, indicating profit-taking on short positions and a more cautious bearish approach. As a result, the total non-profit net position continued its decline and amounted to 66,851 against 67,522 against a week earlier. But the weekly closing price rose significantly to the level of 1.1911 against 1.1816 against last week.

Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 daily moving averages, which indicates an attempt by the bears to continue the downward correction of the pair.

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

The growth will be limited near the upper limit of the indicator in the area of 1.2045. A break of the lower limit of the indicator in the area of 1.2000 will lead to a new fall in the euro.

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, use the futures market for speculative purposes and meet specific 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.