To open long positions on EURUSD, you need:
Buyers of the European currency could not build a larger upward correction yesterday due to the absence of important fundamental statistics, and so the bears returned the market under their control in the second half of the day, completely winning back all the growth. The Commitment of Traders (COT) reports for April 21 recorded an increase in not only long positions, but also short ones, which indicates an active confrontation between buyers and sellers, with a slight advantage of the former. However, a gradual and equal increase in positions in both directions can cause the pair to be suspended in the side channel. Short non-commercial positions increased from 78,461 to 83,160, while long non-commercial positions jumped from 165,078 to 170,378. As a result, the positive non-commercial net position continued to increase its value and reached 87,128, against 86,617, which indicates a slightly greater interest in buying risky assets at attractive low prices, after the pair's decline. As for the intraday strategy, the bulls' unsuccessful attempt to continue the upward correction yesterday could turn into a serious problem. Today's focus will shift to the important support level of 1.0816 in the first half of the day, where forming a false breakout will be a signal to open long positions while expecting the euro to continue growing. An equally important task for the bulls will be to break through and consolidate above the resistance of 1.0856, since this scenario will maintain a corrective trend in the pair that can reach the highs of 1.0882 and 1.0908, where I recommend taking profits. If we do not see active purchases in the support area of 1.0816, it is best to postpone long positions until the test of the larger area of 1.0787, or buy immediately on the rebound from the low of 1.0755, where larger bulls will try to build the lower border of the new ascending channel.
To open short positions on EURUSD you need:
Sellers face one important task - a breakout and consolidation below the support of 1.0816, since this scenario will lead to a more powerful movement of the euro by expecting an update of a low of 1.0787. However, the long-term goal for short positions in the middle of the week will be the areas of 1.0755 and 1.0728, where I recommend taking profits. The release of a weak result on the US consumer index by the second half of the day could result in a sharper decline from EUR/USD. If the bulls manage to keep the 1.0816 area, then I recommend returning to short positions only after forming a false breakout in the 1.0856 resistance area, or sell the euro immediately on a rebound from a high of 1.0882.
Signals of indicators:
Moving averages
Trade is carried out in the region of 30 and 50 moving average, which indicates sellers' attempt to return to the market.
Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differs from the general definition of the classic daily moving averages on the daily chart D1.
Bollinger bands
A breakthrough of the lower border of the indicator in the region of 1.0816 raised the pressure on the European currency. In case of an upward correction, the upper border of the indicator in the area of 1.0856 will act as resistance.
Description of indicators
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
- MACD indicator (Moving Average Convergence / Divergence - Moving Average Convergence / Divergence). Fast EMA period 12. Slow EMA period 26. SMA period 9.
- Bollinger Bands (Bollinger Bands). Period 20.
- Non-profit speculator traders, such as individual traders, hedge funds and large institutions that use the futures market for speculative purposes and meet certain requirements.
- Long nonprofit positions represent the total long open position of nonprofit traders.
- Short nonprofit positions represent the total short open position of nonprofit traders.
- The total non-profit net position is the difference between short and long positions of non-profit traders.
