To open long positions on EUR/USD, you need:
Yesterday's data on the US labor market weakened the greenback's position against the euro, and a false breakout formed at the 1.1555 level, which I drew attention to in my review for the second half of the day, leading EUR/USD to return to the area of weekly highs. However, weak results on the eurozone consumer confidence indicator did not make it possible for the bulls to build a new upward trend. If you look at the 5-minute chart, you will see that after the pair fell in the first half of the day, a false breakout formed in the support area of 1.15555, which became an excellent entry point into long positions further along the trend. At the moment, buyers should protect the support of 1.1591, a false breakout at this level forms a new signal to open long positions to continue the bullish market. Buyers will initially aim for resistance at 1.1647, its breakout will lead to a test of the high of 1.1682, where I recommend taking profits. A lot will depend on what kind of reports will be released on activity in the manufacturing and services sectors of the eurozone countries. If the indicators fall short of the forecast, then after EUR/USD returns to the area below the support of 1.1591, it would be best to postpone long positions until the low of 1.1490 has been updated. But I recommend opening long positions immediately for a rebound from the support of 1.1428 based 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 are trying to do something, but traders are very willing to buy euros at any convenient correction. We need to wait for today's release of reports on activity in the eurozone countries. If the indicators turn out to be worse than economists' forecasts, the pressure on the euro may increase. However, I recommend opening short positions against the trend only after returning and consolidating below the 1.1591 level. The main goal of the bears is to return to the support level of 1.1541, its breakout will lead to a larger sell-off in the area of the low of 1.1490, where I recommend taking profits. The euro will continue to grow if activity reports come out better than economists' forecasts. In this scenario, you can count on sales after updating the resistance at 1.1647, provided that a false breakout is formed there. Or sell EUR/USD immediately on the rebound from the larger high of 1.1682, counting on a correction of 25-30 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 1.1645 will lead to a new wave of euro growth. A break in the lower border at 1.1565 will increase the 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.
