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To open long positions on EUR/USD, you need:
Yesterday some rather good signals to enter the market were formed, and as a result, euro bulls still managed to maintain an upward trend and renew weekly highs. Let's take a look at the 5 minute chart and break down the entry points. In the first half of the day, the bulls were actively trying to regain control of resistance at 1.1885, but nothing came of it, and after a breakout, the pair quickly returned under this range, forming an excellent entry point into short positions on a false breakout. As a result, the movement was about 22 points, which at that time practically coincided with intraday volatility. In my forecast for the second half of the day, I advised you to open long positions after the breakout and consolidation above the 1.1886 level. The chart clearly shows how the bulls are trying to break this range and a test from top to bottom created an excellent entry point into sustaining the bull market. As a result, the euro grew to the resistance area of 1.1914, where I advised you to take profit.
Now the technical picture has slightly changed, and euro bulls are now focused on a breakthrough and consolidation above the new resistance at 1.1917. It is necessary to confirm the bulls' presence in the market in order for us to receive a signal to open new long positions. This will happen after the pair tests this level from top to bottom (by analogy with yesterday's longs in the afternoon). This scenario generates a signal to open new long positions in continuing the upward trend in the area of a high of 1.1947, where I recommend taking profits. The next target will be the 1.1987 area, but we can only get to this level if we receive good reports on the industrial production of the eurozone countries. This will be released in the morning. In case EUR/USD falls in the morning, the bulls need to think of a way to protect support at 1.1886, where the moving averages are that play on the bulls' side. Forming a false breakout there will lead to creating a good entry point into long positions. If the bulls are not active in the 1.1886 area, then it is best to postpone long positions until the lower boundary of the 1.1859 channel has been tested, on which the entire succeeding upward trend depends. You can open long positions immediately on a rebound on the first test, counting on an upward correction of 15-20 points within the day. The next big support is seen around 1.1828.
To open short positions on EUR/USD, you need:
Bears tried to limit the euro's growth potential yesterday, and even defended a fairly large resistance level in the first half of the day, but, apparently, the bulls needed a final breakthrough. The main task for today is to protect an important resistance at 1.1917. Forming a false breakout there in the first half of the day, along with weak data on the volume of industrial production in Germany and France, will result in creating a convenient entry point for short positions, for the purpose of ending the euro's upward trend at the end of this week. An equally important task is to achieve a breakthrough and settle below the 1.1886 level, where the moving averages pass and act as a kind of middle of the channel in which the pair is currently trading. Surpassing this range with a reverse test from the bottom up will only increase the pressure on the euro, which will push the park to the more formidable support at 1.1859, where I recommend taking profits. In case EUR/USD grows in the first half of the day and bears are not active at the 1.1917 level, then I recommend opening short positions only for a rebound from the next resistance at 1.1947, or even higher - around 1.1987, counting on a downward correction of 15-20 points within the day.
The Commitment of Traders (COT) report for March 30 revealed that the indicators of long and short positions underwent a number of changes - especially a strong growth in short positions, which indicates that bears are in control of the market. The delta fell as a result of a small decline in long positions and a sharp rise in short ones. European countries continue to be quarantined this spring due to a new strain of coronavirus and a weak vaccination program that was carried out in the winter. This is causing serious harm to the economy, and there is already talk among analysts that the eurozone's GDP may decline in the second quarter as well. Bureaucratic delays in the implementation of the EU Recovery Fund are another reason for the weak growth of the eurozone economy during the Covid-19 pandemic this year. For this reason, the market remains on the side of sellers of risky assets in the medium term, which may lead to forming a downward trend. Investors expect the United States to be the first to start raising interest rates, which makes the dollar more attractive. One can expect an improvement in the economic outlook for the eurozone only when restrictions are lifted and the service sector is restored, which will return the medium-term trend of strengthening EUR/USD.
The COT report indicated that long non-commercial positions declined from 195,500 to 194,764, while short non-commercial positions rose from 102,178 to 121,024. As a result, the total non-commercial net position continued to decline again and reached 73,739 against 93,332 a week earlier. The weekly closing price also dropped to the 1.1768 area against 1.1932 a week earlier.
Indicator signals:
Moving averages
Trading is carried out above 30 and 50 moving averages, which indicates that the bullish trend will continue for the euro.
Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differs from the general definition of the classic daily moving averages on the daily D1 chart.
Bollinger Bands
Growth will be limited by the upper level of the indicator in the area of 1.1930. In case the pair falls, support will be provided by the lower border of the indicator around 1.1870.
Description of indicators
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