23.05.202418:50 Forex Analysis & Reviews: EUR/USD: trading plan for the US session on May 23rd (analysis of morning deals). The euro rebounded from the 1.0819 level

In my morning forecast, I highlighted the level of 1.0819 and planned to make market entry decisions based on it. Let's look at the 5-minute chart and understand what happened there. The decline and the formation of a false breakout provided a buy signal, resulting in the pair rising by more than 30 points. The technical picture for the second half of the day remained unchanged, as there were no significant market changes.

For opening long positions on EUR/USD:

Data on activity in the Eurozone was better than economists' forecasts, allowing euro buyers to defend the support at 1.0819 and return to the level of 1.0845, where the main struggle is currently occurring. However, it is still too early to say that the bulls have won this battle. Ahead of us are similar data on the manufacturing PMI, services PMI, and Composite PMI in the USA. Poor results in these indicators will likely provoke dollar sales, helping the euro continue to rise. Data on initial jobless claims and new home sales will be of secondary importance. If these figures surprise with their strength, which I doubt, pressure on the euro will increase again. In that case, I plan to open long positions after a decline and the formation of a false breakout around the morning support at 1.0819. The defense of this level, similar to the abovementioned situation, will be a suitable option for entering the market, expecting another test of the 1.0845 resistance formed from yesterday's results. A breakout and renewal from above will strengthen the pair with a chance to surge to 1.0873. The furthest target will be the 1.0895 high, where I will take profits. If EUR/USD declines and there is no activity around 1.0819 in the second half of the day, market pressure will only increase, leading to a larger drop towards 1.0796. After that, we can talk about forming a new bearish trend. I plan to enter only after forming a false breakout. I plan to open long positions immediately on a rebound from 1.0772 with a target of a 30-35 point upward correction within the day.

For opening short positions on EUR/USD:

Sellers have a chance to push the pair further down. For this, they need to assert themselves around the 1.0845 resistance area. Along with a false breakout and good US activity data, one can expect new short positions with the prospect of reducing the euro and updating the 1.0819 support, which could not be broken during European trading. A breakout and consolidation below this range and a reverse test from the bottom up will give another point to sell with the pair's movement toward the 1.0796 low, where I expect more active buying. The furthest target will be the 1.0772 low, where I will take profits. In case of an upward movement of EUR/USD in the second half of the day and no bears at 1.0845, buyers will regain control of the market, but a larger trend development can only be expected after weak US statistics. In that case, I will postpone selling until testing the next resistance at 1.0873, below which the moving averages are playing on the bears' side. I will also sell there, but only after a failed consolidation. I plan to open short positions immediately on a rebound from 1.0895 with a 30-35 point downward correction target.

The COT (Commitment of Traders) report for May 14 showed an increase in long positions and a decrease in short ones. It's clear that recent statements by representatives of the European Central Bank regarding possible rate cut scenarios, as well as good figures indicating continued easing of price pressures in the region, were interpreted in favor of buying risky assets. However, in the short term, rate cuts could pressure the euro. However, there is growing talk about the need to stimulate the economy for recovery, so the euro's growth, in case of borrowing cost reduction, is ensured in the medium term. The COT report indicated that long non-commercial positions rose by 7,804 to 178,398, while short non-commercial positions fell by 4,761 to 161,243. As a result, the spread between long and short positions decreased by 1,089.

Indicator signals:

Moving Averages:

Trading is conducted around the 30 and 50-day moving averages, indicating a sideways market.

Note: The author considers the period and prices of moving averages on the hourly H1 chart, which differs from the general definition of classical daily moving averages on the daily D1 chart.

Bollinger Bands:

In case of a decline, the indicator's lower boundary, around 1.0819, will act as support.

Indicator Descriptions:

• Moving average (determines the current trend by smoothing volatility and noise). Period – 50. On the chart, it is marked in yellow.
• Moving average (determines the current trend by smoothing volatility and noise). Period – 30. On the chart, it is marked in green.
• MACD Indicator (Moving Average Convergence/Divergence – convergence/divergence of moving averages). Fast EMA – period 12. Slow EMA – period 26. SMA – period 9.
• Bollinger Bands (Bollinger Bands). Period – 20.
• Non-commercial traders – speculators such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting certain requirements.
• Long non-commercial positions represent the total long open position of non-commercial traders.
• Short non-commercial positions represent the total short open positions of non-commercial traders.
• Total non-commercial net position is the difference between short and long positions of non-commercial traders.