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To open long positions on EUR/USD, you need:
Yesterday there was only one signal to enter the market, which was formed in the first half of the day. Let's take a look at the 5 minute chart and break down the entry point: reports on the indicator of business environment, the indicator for assessing the current situation and the indicator of economic expectations from IFO Germany did not meet economists' forecasts, which created some kind of pressure on the euro and limited its growth potential. And even though the bulls tried to form a false breakout at the 1.2089 level, which created a good entry point into long positions, after rising by 20 points, the euro eventually returned to support at 1.2089 and went over it. It was not possible to wait for a good entry point in the afternoon, since I did not see a reverse test of the 1.2089 level from the bottom up.
Before talking about the further prospects for the EUR/USD movement, let's see what happened in the futures market and how the Commitment of Traders positions have changed. The Commitment of Traders (COT) report for April 20 showed that the indicators of long and short positions significantly changed - short positions decreased, and long positions sharply increased, which indicates that players have been actively buying the euro. The news that the vaccination program in the European Union is finally bearing fruit has supported the euro, as well as the fact that large eurozone countries will begin to more actively withdraw from quarantine in the near future. The European Central Bank's decisions on monetary policy did not significantly affect the euro's rate, since there weren't any changes, as well as talks on the part of the ECB administration about the high rate of the euro.
The COT report indicated that long non-commercial positions sharply grew from 190,640 to 197,137, while short non-commercial positions fell from 123,789 to 116,329, indicating an influx of new buyers with expectations that the euro would continue rising. Therefore, it is not surprising that any calculation for a downward correction for the pair in the short term has failed in the past week. As a result, the total non-commercial net position sharply rose from 66,851 to 80,808 a week earlier. The weekly closing price continued to rise to 1.2042 versus 1.1911 last week.
We do not expect much of fundamental reports for today, but the Federal Reserve will begin a two-day meeting on monetary policy, the results of which will be announced tomorrow. So don't be surprised if market volatility is low. Bulls still need to think of a way to regain the 1.2089 level. It will be problematic considering that the eurozone will not release important reports in the first half of the day. A breakthrough and consolidation above this range with a reverse test from top to bottom generates a signal to open new long positions as part of continuing the upward trend in the area of a new high at 1.2133, where I recommend taking profits. The next target will be the 1.2180 level, but one can hardly bet on such an active growth before the Fed announces its results tomorrow. We can expect the euro to sharply fall if the bulls are not active in the first half of the day. In this case, I recommend opening long positions only if a false breakout forms in the 1.2047 area, which creates a good entry point for long positions with the main goal of returning to the 1.2089 level. If the bulls are not active and at the 1.2047 low in particular, then it is best to hold back from longs until the lower border of the horizontal channel of the previous week near 1.1998 has been updated, from there you can buy the euro immediately on a rebound, counting on an upward correction of 20-25 points within the day.
To open short positions on EUR/USD, you need:
The initial task, which the bears did an excellent job in yesterday's US session, is to protect resistance at 1.2089. Forming a false breakout there in the first half of the day creates a good signal for opening new short positions in continuing the current downward correction to the low of 1.2047, where I recommend taking profits. In case of a larger spike in volatility in the first half of the day: the next target will be the 1.1998 area, which is the lower border of the horizontal channel of the previous week. However, we can only reach that area if we receive very good fundamental reports on the US economy in the afternoon. If the bears are not active in the 1.2089 area, and the bulls manage to regain this range, then it is best to refuse to sell until EUR/USD reaches a new local high in the 1.2133 area. You can also sell the euro on a rebound from the 1.2180 level, counting on a downward correction of 20-25 points within the day.
Indicator signals:
Moving averages
Trading is carried out in the area of 30 and 50 moving averages, which indicates the sideways nature of the market ahead of important fundamental events.
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
Surpassing the upper border of the indicator in the area of 1.2105 will lead to a new wave of growth for the euro. Surpassing the lower border of the indicator in the area of 1.2065 will increase the pressure on the pair.
Description of indicators
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