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To open long positions on EURUSD, you need to:
In the first half of the day, I paid attention to the support of 1.2179 and recommended that it make decisions on entering the market. Let's look at the 5-minute chart and analyze the entry points. The bears are making another unsuccessful attempt to consolidate below this range, which leads to the formation of a signal to open long positions. However, weak data on French GDP and the remaining revision of the consumer confidence index in the euro area did not allow the euro to recover appropriately. As a result, the upward movement from the level was about 20 points, and the growth ended. Given that the volatility remains relatively low, I recommend sticking to the morning scenario.
Buyers of the European currency during the US session will be aimed at returning the resistance of 1.2219, which they have not yet reached today. Only a break and a test of this area from top to bottom on the volume can form a new entry point into long positions in the continuation of the upward trend and in the expectation of updating the monthly maximum in the area of 1.2261, where I recommend fixing the profits. The more distant target will be the area of 1.2313. However, it will not be so easy to get to this level. The growth may come only after the weak fundamental statistics on the income and spending of Americans, which is expected in the afternoon. If the data becomes better than economists' forecasts and the consumer sentiment index and inflation expectations reach a higher level, then it is best not to rush into purchases. The optimal scenario will be the next formation of a false breakout in the support area of 1.2179, around which we have been walking for the second day. With this option, you can open long positions with the expectation of stopping the bearish trend and restoring the pair to the resistance area of 1.2219. The level of 1.2179 also acts as a kind of lower border of the side channel, in which the pair is now locked. In the scenario of weak bull activity in the support area of 1.2179, it is best to postpone short positions until the update of a new large low in the area of 1.2126 in the expectation of an upward correction of 15-20 points within the day.
To open short positions on EURUSD, you need to:
The bears continued to fight for the downward trend of the pair actively. However, they failed to gain a foothold below the support of 1.2179 in the first half of the day. Another test of this area during the US session may lead to a breakout of the range, and the reverse test from the bottom up will form an excellent signal to open new short positions in the continuation of the downward trend. Good data on the US economy will lead to pressure on the pair, and the immediate target of the bears will be the area of 1.2126, where I recommend taking the profits. Support for 1.2075 remains the longer-term target. If EUR/USD rises during US trading and low volatility remains today after the reports, only the formation of a false breakout in the area of 1.2219 will form a new signal to sell the euro in the expectation of a decline to the lower border of the side channel and its breakdown. In the absence of bear activity, I recommend postponing short positions until the resistance update at 1.2261, where you can sell the euro immediately for a rebound with the aim of a downward correction of 15-20 points within the day. The next major resistance passes only at a new local maximum in the area of 1.2313.
Let me remind you that the COT report (Commitment of Traders) for May 18 showed an increase in short and long positions. Last week, everyone was waiting for economic indicators for the eurozone, namely data on inflation and GDP growth rates. The reports coincided with economists' forecasts, which allowed the euro to maintain an upward potential in the pair. The publication of the Federal Reserve meeting minutes led to a sharp decline in risky assets, as there were ghostly hints among the committee members about the curtailment of the central bank's bond-buying program. However, the next day, the whole fall was played out. By the end of the week, pressure on the euro returned after statements by the President of the European Central Bank, Christine Lagarde, that it was not yet time to scale back stimulus support in the eurozone. The data that was released over the past week did not worry traders much, as all attention is now focused on central banks' monetary policy. Only the news that the Fed is seriously going to reduce the volume of bond purchases will lead to a serious increase in the US dollar. Up to this point, with each decline in the pair, the demand for risky assets will return, which will help the euro in the short term to continue to update the monthly highs. The COT report shows that long non-profit positions jumped from the level of 223,387 to 232,330, while short non-profit positions rose from 129,480 to the level of 132,472. It indicates an influx of new buyers in the expectation of continued growth of the euro, but there are more and more willing to sell with each update of the maximum. The total non-commercial net position increased from the level of 93,907 to the level of 99,858. The weekly closing price also increased from the level of 1.21406 to 1.21564.
Signals of indicators:
Moving averages
Trading is conducted below 30 and 50 daily moving averages, which indicates that the market remains on the side of the euro sellers.
Note: The period and prices of the 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
A break of the lower limit of the indicator in the area of 1.2179 will increase the pressure on the euro. A break of the upper limit of the indicator 1.2205 will lead to a new wave of growth of the pair.
Description of indicators
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