01.06.202113:15 Forex Analysis & Reviews: EUR/USD: plan for the US session on June 1 (analysis of morning trades)

To open long positions on EURUSD, you need to:

In the first half of the day, I paid attention to the support of 1.2220 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. After a slight increase of 20 points, the price again returns to the above range. And against the background of good data on activity in the manufacturing sector of the eurozone countries and inflation, there is another protection of the level of 1.2220, which forms an additional signal to buy the euro. At the time of writing, the bulls have not built significant upward momentum, although the market continues to be under their control.

From a technical point of view, nothing has changed. As long as the trade is conducted above the level of 1.2220, the demand for the euro will remain. Given that the buyers coped with the initial task, most likely during the American session, they will be aimed at the resistance of 1.2261. A breakout and a test of this area already from top to bottom on the volume can form an entry point into long positions in the continuation of the upward trend in the expectation of updating the next monthly high of 1.2313, where I recommend fixing the profits. The next target will be the level of 1.2347. Suppose the data on the US economy and the speeches of representatives of the Federal Reserve System somehow affect the dollar and strengthen its position. In that case, a more optimal scenario for purchases will be a downward correction of the pair to the area of the same support of 1.2220, where the moving averages play on buyers' side. The formation of a false breakout will be a good entry point into long positions to continue the bull market. In the scenario with the absence of bull activity in the area of 1.2220, short positions can be safely opened from a large low in the area of 1.2182, or even lower - in the area of 1.2134 in the expectation of an upward correction of 15-20 points within the day. If the bulls do not manage to get out of the resistance of 1.2261 today, trading will continue in the wide side channel of 1.2134-1.2261.

To open short positions on EURUSD, you need to:

Bears will continue to fight for the return of the market under control. For this, you need to break below the support of 1.2220, which was impossible in the first half of the day. Only good fundamental data on the activity of the US manufacturing sector, as well as a breakdown and a test from the bottom up of the level of 1.2220 – will form a new sell signal to return to the lower border of the side channel 1.2182, where I recommend fixing the profits. The next target will be a minimum of 1.2134. However, such a scenario is unlikely to be possible without serious market shocks. With the European currency rising further in the second half of the day after such good fundamental data on the European economy, the bears will have to defend the large resistance of 1.2261, which buyers are now targeting. This level also acts as the upper border of the side channel. Only the formation of a false breakout will form a new signal to sell the euro. In the scenario of no bear activity in the area of 1.2261, I recommend postponing short positions immediately for a rebound from the large resistance of 1.2313 to expect a downward correction of 15-20 points. The next serious level is at a new local maximum in the area of 1.2347.

Let me remind you that the COT report (Commitment of Traders) for May 25 shows an increase in long positions and a reduction in short ones, which indicates an increase in demand for the European currency before the start of the last month of the second quarter of this year. It is expected that the European economy will show particularly strong growth in the summer, which will lead to new growth of the European currency in the area of annual highs. Data on the growth rate of the US economy in the 1st quarter of 2021 did not particularly surprise last week, which led to continued pressure on the US dollar. Traders now perceive any strong movements of the EUR/USD pair as an excellent opportunity to gain long positions in the continuation of the bull market. 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. However, we will know about this only by mid-June. Up to this point, every time the pair declines, the demand for risky assets will return. The COT report shows that long non-profit positions jumped from 232,330 to the level of 236,103, while short non-profit positions fell from the level of 132,472 to the level of 132,103. It indicates an influx of new buyers in the expectation of continued growth of the euro and a wait-and-see attitude on the part of sellers.

Given that the pair has been standing at local highs for quite a long time, the bulls accumulate long positions. However, the sellers are gradually getting rid of the euro. It indicates a possible breakdown of monthly highs in the near future and the continuation of the euro's growth. The total non-profit net position increased from 99,858 to 104,000. The weekly closing price also increased from the level of 1.21564 to 1.22142.

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 daily moving averages, which indicates that the market remains under the control of buyers.

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 1.2220 will increase the pressure on the euro. A break of the upper limit of the 1.2240 indicators will lead to a new wave of growth of the pair.

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 speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet 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 position of non-commercial traders.
• Total non-commercial net position is the difference between the short and long positions of non-commercial traders.