FX.co ★ EUR/USD: trading plan for the US session on July 14th (review of morning trades). Euro bulls are experiencing some difficulties

In my morning forecast, I drew attention to the level of 1.1216 and recommended making decisions about entering the market from it. Let's look at the 5-minute chart and figure out what happened there. A false breakout at this level signaled a buy, which resulted in a 25-point upward movement. The technical picture was reviewed for the second half of the day.

Requirements for opening long positions on EUR/USD:

Euro buyers showed activity after the pair's correction, but, as you can see, not many were willing to buy around the year's highs at the end of the week. In the second half of the day, we expect figures on the import price index and the University of Michigan's consumer sentiment index. Inflation expectations will also be significant, giving a real picture of consumers' feelings. Strong data can lead to a larger euro correction during the American session. So, I prefer to act only around the new support at 1.1206, formed during the day's first half.

Protecting this level is very important, so only a false breakout there, similar to what I discussed above, will signal a buy, confirming the presence of major players in the market, capable of pushing the euro up to new annual highs at the end of the week. The target, in this case, will be resistance at 1.1174. A breakthrough and top-down test of this range will strengthen the demand for the euro, giving a chance for a surge to 1.1242. The furthest target remains in the area of 1.1276, indicating establishing an ascending euro trend. I will fix the profit there. In the case of a decrease in EUR/USD and the absence of buyers at 1.1206 during the American session, and there are moving averages there, playing on the bulls' side, bears may start to act more actively, considering a correction. Therefore, only a false breakout around the next support of 1.1164 will signal a euro purchase. I will open long positions immediately on a rebound from a minimum of 1.1130, with the target of an upward correction of 30-35 points within the day.

Requirements for opening short positions on EUR/USD:

Sellers are gradually gaining the initiative, and if US data does not disappoint, we can expect a larger pair correction. Most likely, bears will focus on defending the nearest resistance at 1.1242, a test of which, along with a false breakout, will signal a sale with the prospect of reducing EUR/USD to the support of 1.1206. There, I expect more substantial buyers. Consolidation below this range and a reverse test from the bottom up against the background of strong US statistics is a direct road to 1.1164. This will indicate a rather large correction of the euro, which can return buyers' appetite. The furthest target will be the area of 1.1130, where I will fix the profit.

In the event of an upward movement of EUR/USD during the American session and the absence of bears at 1.1242, which is quite possible in the current bull market, the euro will continue to rise. In such a case, I will delay short positions until the next resistance at 1.1276. I may also sell there, but only after unsuccessful consolidation. I will open short positions immediately on a rebound from the high of 1.1310 with the aim of a downward correction of 30-35 points.

In the COT report (Commitment of Traders) of July 3rd, a reduction in long and short positions was observed, which left the balance of power in the market almost unchanged. The released US labor market data indicate the first signs of cooling, which favors buyers of risky assets, expecting aggressive monetary and credit policies from their central banks, which cannot be said about the Federal Reserve. Many believe that the expected Federal Reserve rate hikes are already factored into the quotes, and any data indicating a reduction in price pressure could lead to a larger dollar sell-off. The optimal medium-term strategy under current conditions remains to buy the euro on declines. The COT report stated that non-commercial long positions decreased by 2,705 to 221,272, while non-commercial short positions fell by 514 to 78,435. As a result of the week, the total non-commercial net position decreased slightly and was 142,837 against 145,028. The weekly closing price dropped to 1.0953 from 1.1006.

Indicator signals:

Moving averages

Trading is above the 30 and 50-day moving averages, indicating further pair growth.

Note: The author considers the period and prices of moving averages on the H1 hourly chart, which differs from the general definition of classic daily moving averages on the D1 daily chart.

Bollinger Bands

In the case of growth, the upper boundary of the indicator at around 1.1242 will act as resistance.

Indicator descriptions:

• Moving average (determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.

• 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). Fast EMA period 12. Slow EMA period 26. SMA period 9

• Bollinger Bands. Period 20

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

• Non-commercial long positions represent the total long open position of non-commercial traders.

• Non-commercial short positions represent the total short open position of non-commercial traders.

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