Yesterday, traders received just one signal to enter the market. Let us take a look at the 5-minute chart to clear up the market situation. Earlier, I asked you to pay attention to the level of 1.0830 to decide when to enter the market. A decline and a false breakout of this level led to a buy signal, which allowed the pair to climb by 40 pips. Nevertheless, the price failed to test the nearest resistance level of 1.0874. That is why traders did not get a sell signal.
Conditions for opening long positions on EUR/USD:
This day is expected to be more interesting that the previous one. Thus, the euro may decline if bulls fail to protect 1.0870, especially after a release of fundamental data. The eurozone will disclose its consumer confidence data, while Germany will report its consumer price index figures. The ECB economic bulletin may help traders to understand the main economic trend in Europe. If inflation in Germany declines more than expected, the euro will face pressure. In this case, it is better to go long only near the support level of 1.0824. Slightly above this area, there are bullish MAs. A false breakout of this level will give a good buy signal with the target near a new resistance level of 1.0870. A breakout and a downward test of this level will form an additional buy signal with the target at 1.0903, where it is better to lock in profits. The currency is unlikely to reach a new monthly high near 1.0945. If the euro/dollar pair declines and buyers fail to protect 1.0824, which is possible, pressure on the euro will surge. In the event of this, the asset may drop to 1.0787. Only a false breakout of this level will give a buy signal. Traders may also go long just after a bounce off the low of 1.0748 or even lower – at 1.0716, expecting a rise of 30-35 pips.
Conditions for opening short positions on EUR/USD:
Yesterday, sellers showed activity and now, they have the intention to form a stronger downward movement. However, they should primarily protect the level of 1.0870. It will be wise to open sell orders after a false breakout of this level, which will lead to a decline to the nearest support level of 1.0824. A breakout and a reverse test of this area amid weak data from the eurozone will cause a drop to 1.0787. A settlement below this level will push the price to 1.0748, which will encourage bears. At this level, it is better to lock in profits. If the euro/dollar pair rises during the European session and bears fail to protect 1.0870, which is quite possible, it is better to avoid short positions until the price hits 1.0906. There, it is possible to sell only after a false settlement. Traders may also go short just after a rebound from the high of 1.0945, expecting a decline of 30-35 pips.
COT report
According to the COT report from March 21, the number of both long and short positions dropped. The Fed's meeting held in March affected the market situation. However, the US dollar is unlikely to slump since the regulator remained stuck to its policy. The aggressive approach of the ECB is the only fact that is supporting the euro at the moment. The central bank is planning to raise the key interest rate higher without altering its stance. Thus, the COT report unveiled that the number of long non-commercial positions decreased by 6,488 to 215,825, while the number of short non-commercial positions fell by 11,374 to 70,983. At the end of the week, the total non-commercial net position increased to 144,842 against 139,956. The weekly closing price rose to 1.0821 against 1.0803.
Signals of indicators:
Moving Averages
Trading is performed above the 30- and 50-day moving averages, which points to a further rise in the pair.
Note: The author considers the period and prices of moving averages on the one-hour chart which differs from the general definition of the classic daily moving averages on the daily chart.
Bollinger Bands
In case of a decline, the lower limit of the indicator located at 1.0825 will act as support.
Description of indicators
- Moving average (a moving average determines the current trend by smoothing volatility and noise). The period is 50. It is marked in yellow on the chart.
- Moving average (a moving average determines the current trend by smoothing volatility and noise). The period is 30. It is marked in green on the graph.
- MACD indicator (Moving Average Convergence/Divergence - convergence/divergence of moving averages). A fast EMA period is 12. A slow EMA period is 26. The SMA period is 9.
- Bollinger Bands. The period is 20.
- Non-profit speculative traders are individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
- Long non-commercial positions are the total number of long positions opened by non-commercial traders.
- Short non-commercial positions are the total number of short positions opened by non-commercial traders.
- The total non-commercial net position is a difference in the number of short and long positions opened by non-commercial traders.
