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

To open long positions on EURUSD, you need to:

In my morning forecast, I paid attention to the level of 1.2154 and recommended that you make decisions on entering the market from it. If you look at the 5-minute chart, you will see how the bulls did not show much activity in the support area of 1.2154, and the blurring of this level did not allow us to determine the entry point at the beginning of the European session. Then, a few false breakouts at the level of 1.2154 did not allow the bulls to continue Friday's upward trend in the area of new local highs. The absence of important fundamental statistics today may negatively affect the market volatility in the second half of the day.

From a technical point of view, only the nearest support and resistance levels changed in the second half of the day, and the tactics remained the same. The task of euro buyers is to protect the support of 1.2139. From this level last Friday, it was possible to observe a return to the market of buyers after the release of the US employment report. The formation of a false breakout will help the bulls gain strength, which will lead to an upward correction to the resistance area of 1.2169, which was formed today in the first half of the day. A breakout and consolidation on this range with a test of it from top to bottom will form an additional entry point into long positions, which will open a direct road to the area of 1.2194, where I recommend taking the profits. As noted above, important fundamental data on the US economy are not published in the second half of the day. Thus, if there is no bull activity in the support area of 1.2139, it is best to postpone long positions until the test of the level of 1.2113, from which you can buy the pair immediately for a rebound of 10-15 points within the day.

To open short positions on EURUSD, you need to:

Bears are also not very active in the market, which is proved by the intraday volatility of 20 points. Their initial task remains to protect the resistance of 1.2169. Only the formation of a false breakout will form a new sell signal for EUR/USD in the expectation of a further decline in the pair to the support of 1.2139. A breakout and a test of this range from the bottom up, together with weak data on the eurozone investor confidence indicator, form an additional entry point into short positions already in the expectation of an exit to the minimum of 1.2113, where I recommend fixing the profits. A more distant target will be the support of 1.2073. However, we are unlikely to reach it today. In the absence of bear activity in the area of 1.2169 and the sharp growth of the euro in the second half of the day, I recommend postponing sales until the resistance is updated at 1.2194. However, you can open short positions only when a false breakout is formed. I recommend selling EUR/USD immediately for a rebound only from a large high of 1.2213 with the aim of a downward correction of 15-20 points within the day. The next major resistance passes only at a new local maximum in the area of 1.2249.

Let me remind you that the COT report (Commitment of Traders) for May 25 shows an increase in long positions and a reduction in short ones, which indicates an increase in demand for the European currency before the start of the last month of the second quarter of this year. It is expected that the European economy will show particularly strong growth in the summer, which will lead to new growth of the European currency in the area of annual highs. Data on the growth rate of the US economy in the 1st quarter of 2021 did not particularly surprise last week, which led to continued pressure on the US dollar. Traders now perceive any strong movements of the EUR/USD pair as an excellent opportunity to gain long positions in the continuation of the bull market. Only the news that the Fed is seriously going to reduce the volume of bond purchases will lead to a severe increase in the US dollar. However, we will know about this only by mid-June. Up to this point, every time the pair declines, the demand for risky assets will return. The COT report shows that long non-profit positions jumped from 232,330 to the level of 236,103, while short non-profit positions fell from the level of 132,472 to the level of 132,103. It indicates an influx of new buyers in the expectation of continued growth of the euro and a wait-and-see attitude on the part of sellers.

Given that the pair has been standing at local highs for quite a long time, the bulls accumulate long positions. However, the sellers are gradually getting rid of the euro. It indicates a possible breakdown of monthly highs in the near future and the continuation of the euro's growth. The total non-profit net position increased from 99,858 to 104,000. The weekly closing price also increased from the level of 1.21564 to 1.22142.

Signals of indicators:

Moving averages

Trading is conducted in 30 and 50 daily moving averages, indicating market uncertainty with the further direction.

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 volatility has decreased sharply, which does not give signals for entering the market.

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 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.