To open long positions on EUR/USD, you need:
Yesterday's data on the US labor market, where there was a good recovery, was spoiled by the indicator on average earnings of Americans, which seriously declined in June this year, which is a bad enough signal for the economy. Short positions on the euro, which were formed in the first half of the day after an unsuccessful breakout of the 1.1286 resistance and also led to forming a new level of 1.1297, as a result, pushed EUR/USD back to the middle of the 1.1241 channel, around which trading is currently being conducted. Volatility could remain low until the end of the week since today is Independence Day in the US. As for purchases of the European currency, you can look at them if a false breakout is formed at the support level of 1.1241, and also after the release of good data on activity in the service sector of the eurozone countries, since this can help the bulls return the pair to the weekly high of 1.1297, where I recommend fixing profits. If there is no movement from the level of 1.1241 in the first half of the day, and the trade moves under this range after the data, it is best to postpone long positions until the test of the week's lows in the area of 1.1193 and buy euros there while expecting a rebound and a correction of 25-30 points by the end of the day. Let me remind you that in the Commitment of Traders (COT) reports for June 23, there are some changes that could affect the growth prospects of the European currency. The growth of long positions was recorded a week earlier, but the growth of short positions was also noted, which indicates a possible slowdown in the bullish momentum in the short term. The report shows an increase in short non-commercial positions from the level of 69,988 to the level of 72,368, while long non-commercial positions also slightly increased from the level of 187,120 to the level of 190,816. As a result, the positive non-commercial net position increased again to 118,448, against 117,132, which indicates a slight slowdown in the growth of interest in buying risky assets at current prices.
To open short positions on EUR/USD, you need:
Sellers of the euro will wait for weak data on activity in the service sector, but a return to the support area of 1.1241, which is a kind of middle of the side channel this week, and consolidating under it will be a signal to open short positions. This scenario will lead to a repeated decline in EUR/USD to the low of 1.1193, the next test of which will increase pressure on the euro and pull down the pair to the lows of 1.1155 and 1.1106, where I recommend taking profits. If the bears are not active in the area of 1.1241, it is best to postpone short positions until updating the upper limit of the channel 1.1297, which was formed yesterday after the release of data on the US labor market. However, larger players will return to the market from a high of 1.1325, the test of which can lead to a downward correction of EUR/USD of 25-30 points within the day.
Indicator signals:
Moving averages
Trading is conducted in the area of 30 and 50 moving averages, which indicates the confusion of traders and the choice of the further direction of the pair.
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
If the pair declines, the lower border of the indicator around 1.1210 will provide support. Growth will be limited by the upper level of the indicator in the area of 1.1285.
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.
