FX.co ★ EUR/USD trading plan for European session on June 14, 2023. COT report and overview of yesterday's trades. Bulls need to defend 1.0766

Yesterday, several entry signals came. Let's look at the 5-minute chart to get a picture of what happened. Previously, I considered entering the market from the level of 1.0800. Growth and a false breakout through 1.0800 generated a sell signal, but a significant downward movement did not occur. In the second half of the day, a false breakout and downward test through 1.0767 produced a buy signal, resulting in growth of 15 pips, and that was the end of it.

For long positions on EUR/USD:

Yesterday's US inflation report helped the EUR/USD pair renew its weekly highs, but traders failed to consolidate. No important reports lined up this morning, so the whole focus will shift to the U.S. session and the Federal Reserve's interest rate decision. But we will delve into that in the afternoon forecast. The eurozone industrial production report for April is unlikely to seriously influence the market direction, so we can expect the euro to fall in the first half of the day.

For this reason, I will act around the support level of 1.0766, which was formed yesterday. I will open long positions only after a false breakout through the mark, anticipating growth towards resistance at 1.0795, which is in line with the bearish moving averages. A breakout and a downside test of this range will strengthen demand, maintaining its chance to rise to 1.0822, a new resistance. The ultimate target remains in the area of 1.0870, where I will take profits.

In the case of EUR/USD decline and the absence of buyers at 1.0766, and this scenario is more likely in the first half of the day, the pair will remain under pressure, and the bears will try to completely block all the growth. Therefore, only the formation of a false breakout of the next support level of 1.0734 would provide a buy signal for the euro. I will open long positions immediately if EUR/USD bounces off the low at 1.0705, targeting an upward intraday correction of 30-35 pips.

For short positions on EUR/USD:

The bears performed quite well during the Asian session, but we can hardly count on them to be more active. The U.S. central bank taking a pause in its rate hiking cycle will surely play into the bulls' hands. For that reason, we should proceed with selling very cautiously. The bears need not go beyond 1.0795, which is in line with the bearish moving averages. A false breakout at this mark will generate a sell signal that might push the EUR/USD back to 1.0766, which is a support that plays an important role in the pair's direction for the day. In case of consolidation below this range, as well as an upside retest, the pair will head toward 1.0734. The most distant target is seen at a low of 1.0705, where I will take profit.

In case EUR/USD moves up during the European session and there are no bears at 1.0795, trading will move to the side channel, bullish sentiment will improve, and they probably plan to take advantage of the Fed's pause. In that case, I will postpone going short on the pair until it reaches the next resistance level of 1.0822. New short positions can also be opened there, but only after a failed consolidation. I will open short positions immediately if EUR/USD bounces off the high of 1.0870, targeting a downward correction of 30-35 pips.

COT report:

The COT report for June 6 revealed a fall in long positions and a slight increase in short positions. The decision of the Federal Reserve on interest rates this week can significantly change the situation in the market. If the Federal Reserve decides to pause hiking rates, the euro will gain significantly while the US dollar will weaken. With an aggressive European Central Bank and despite the signs of a slowdown in underlying inflationary pressures, risk assets will likely continue strengthening against the US dollar. According to the COT report, non-commercial long positions decreased by 5,757 to 236,060, while non-commercial short positions increased by 1,457 to 77,060. The overall non-commercial net position dropped to 158,224 from 163,054. The weekly closing price fell to 1.0702 from 1.0732.

Indicator signals:

Moving Averages

Trading is carried out below the 30 and 50-day moving averages, which indicates bearish attempts to return to the market.

Please note that the time period and levels of the moving averages are analyzed only for the H1 chart, which differs from the general definition of the classic daily moving averages on the D1 chart.

Bollinger Bands

If the pair falls, the lower band of the indicator at 1.0780 will act as support.

Description of indicators:

• A moving average of a 50-day period determines the current trend by smoothing volatility and noise; marked in yellow on the chart;

• A moving average of a 30-day period determines the current trend by smoothing volatility and noise; marked in green on the chart;

• MACD Indicator (Moving Average Convergence/Divergence) Fast EMA with a 12-day period; Slow EMA with a 26-day period. SMA with a 9-day period;

• Bollinger Bands: 20-day period;

• Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements;

• Long non-commercial positions represent the total number of long positions opened by non-commercial traders;

• Short non-commercial positions represent the total number of short positions opened by non-commercial traders;

• The non-commercial net position is the difference between short and long positions of non-commercial traders.