To open long positions on EUR/USD, you need:
The euro's growth from yesterday morning, where we managed to enter the correction stage (I analyzed the trade in detail in the afternoon forecast), turned into new purchases with several signals forming for entering the market in the US session. Let's talk about them in more detail and see where it was best to enter the market. Breakout and consolidating above the resistance of 1.1569, and then its test formed a good point to continue opening long positions, which almost led to an update of the resistance of 1.1605, which was just 5 points short of the test. The sell signal formed after a repeated approach to the 1.1600 range, which resulted in a downward correction of the pair to the end of the US session. At the moment, the initial task of the bulls is to protect the support of 1.1555 and form a false breakout on it, this will be a signal to open long positions in order to break and consolidate above the resistance of 1.1597. You should be very careful with buying the euro at the current high, since a divergence formed on the MACD indicator, which will limit the upward potential. If there is no activity on the part of sellers after consolidating above 1.1597, you can add long positions while expecting to update the levels of 1.1648 and 1.1682, where I recommend taking profits. Given that no important fundamental data are published in the first half of the day, a return of EUR/USD to support 1.15555 is not excluded. In this scenario, it is best to open long positions after updating yesterday's low of 1.1509, or immediately on a rebound from the support of 1.1466, counting on a correction of 25-30 points within the day.
Let me remind you that the Commitment of Traders (COT) report for July 14 recorded an increase in long positions and a very small rise in short ones, which indicates a gradual increase in demand for risky assets. There are more and more people willing to buy euros in the current conditions and at high prices,which may lead to further growth in the medium term. The report shows an increase in short non-commercial positions from the level of 881,562 to the level of 83,340, while long non-commercial positions jumped from the level of 185,159 to the level of 194,252. As a result, the positive non-commercial net position increased to 110,912, against 103,597, which indicates an increase in interest in purchasing risky assets at current prices.
To open short positions on EUR/USD, you need:
Sellers clearly indicated their presence in the 1.1600 resistance area, but their actions will determine the pair's direction. The optimal scenario for opening short positions is forming a false breakout at 1.1597, after updating yesterday's high, and a fully formed divergence on the MACD indicator. In this case, you can sell against the trend and wait for EUR/USD to return to the support area of 1.15555. An equally important goal of the bears is a breakout and consolidating below this level, which will only strengthen the downward correction and push the euro to the low of 1.1509, where I recommend taking profits. Support for 1.1466 is a long-term goal for the end of the week. If sellers are not active in the 1.1597 area today, it is best to postpone short positions until an update of a high of 1.1648, or sell EUR/USD immediately on the rebound from the resistance of 1.1682 based on a correction of 30-40 points within the day.
Indicator signals:
Moving averages
Trading is conducted above 30 and 50 moving averages, which indicates the likelihood of a further bull market.
Note: the period and prices of 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
Breaking the upper limit of the indicator around 1.1597 will lead to a new wave of euro growth. Break of the lower border region 1.1555 will increase pressure on the pair.
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) Fast EMA period 12. Slow EMA period to 26. SMA period 9
- Bollinger Bands (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.
- 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.
- The total non-commercial net position is the difference between short and long positions of non-commercial traders.
