FX.co ★ EUR/USD: plan for the European session on June 24. COT reports. Bears aim to regain control of the market and break the support of 1.1914

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

Despite the release of a number of important fundamental reports, only one signal to enter the market was formed yesterday. Let's take a look at the 5 minute chart and talk about what happened. Good data on the eurozone PMIs still did not allow the pair to demonstrate growth in continuation of the upward correction. It is clearly seen how the bulls are trying to rise above the resistance of 1.1950, but this only leads to forming a false breakout and creating a signal to open short positions, counting on a downward correction from the pair. The bulls still managed to surpass 1.1950 in the afternoon, but this did not lead to a major upward movement, and after the reports on the US PMI indices, it moved below the 1.1950 level, and its reverse test from the bottom up created another entry point to short positions. This time the downward movement turned out to be larger, which made it possible to pick up about 25 points.

At the moment, the bulls need to work very hard to maintain the bullish momentum seen earlier this week. The IFO indicator of German business conditions is published in the morning, as well as the economic bulletin of the European Central Bank. Only good data and the formation of a false breakout in the support area of 1.1914 can create a signal to open long positions in hopes that EUR/USD further grows to the resistance area of 1.1968, above which it was not possible to break through yesterday. A breakthrough and a test of this level from top to bottom may create another signal to open long positions in order to restore the pair to a larger resistance at 1.2000, where I recommend taking profits. The next target will be the area of 1.2032. In case the bulls are not that active in the 1.1914 area, it is best not to rush into long positions. I recommend waiting for the presentation of the representatives of the European Central Bank, as well as the update of support at 1.1884. It is possible to buy EUR/USD immediately on a rebound only from the low of 1.1852, counting on an upward correction of 15-20 points within the day.

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

An important task for the bears in the first half of the day will be for them to go beyond support at 1.1914. A disappointing report for Germany will most likely lead to this scenario and return the pressure on the euro, which was observed last week. Therefore, only a breakthrough and test of the 1.1914 area from the bottom up can create a good signal to open short positions, and the goal is for EUR/USD to further fall to the lows of 1.1884 and 1.1852, where I recommend taking profits. If the euro grows during the European session, an equally important task for the bears is to protect the resistance at 1.1968, which was formed yesterday afternoon. Forming a false breakout there will be the entry point for short positions in the euro. If the bears are not active there today, I recommend postponing short positions until the resistance test of 1.2000, where you can immediately sell the pair on a rebound, counting on a downward correction of 15-20 points. The next major selling resistance comes at 1.2032 high.

The Commitment of Traders (COT) report June 15 shows that both short and long positions significantly fell, however, the data does not take into account the Federal Reserve's decision on interest rates, so I do not recommend putting a lot of emphasis on these indicators right now. Let me remind you that last week, the euro went back to falling against the US dollar after the Fed's first hints about an earlier increase in interest rates in 2023. It also suggests that the US central bank may soon begin phasing out its bond buying program, which will further strengthen the dollar on the global stage. Inflation data that was recently released for the US and the eurozone suggests that the European Central Bank will not rush to make changes in its policy yet, which also weakens the euro's position. Most likely, the trend towards strengthening of the US dollar will continue this week. The COT report indicates that long non-commercial positions fell from 232,103 to 210,816, while short non-commercial positions fell from 124,890 to 92,630. It should be understood that the lower the European currency falls, the more interest it will challenge traders, as the eurozone economy is aimed at strong growth in the summer, which will certainly affect the prospects for its recovery after the coronavirus pandemic. The total non-commercial net position rose from 107,213 to 118,186. The weekly closing price declined from 1.2190 to 1.2121.

Indicator signals:

Trading is carried out in the area of 30 and 50 moving averages, which indicates the likelihood of renewed decline in the euro.

Moving averages

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

Bollinger Bands

Surpassing the lower border of the indicator in the area of 1.1914 will increase pressure on the euro. A breakthrough of the upper border of the indicator around 1.1960 will lead to a new wave of euro growth.

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.