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To open long positions on EUR/USD, you need:
Yesterday, euro buyers managed to regain control of the 1.1714 level and build a small upward correction. However, most likely, the growth occurred while traders took profit at the end of the month, and not because new buyers returned to the market. We did not cope with the 1.1753 level. Let's look at the 5-minute chart and analyze the deals: the bulls went above 1.1714 in the first half of the day, but this level was not tested from top to bottom (I marked it on the chart with blue lines), as a result, I was forced to miss the growth that was observed then. Amid low volatility, the bulls managed to get close to the 1.1753 level in the afternoon, where, after a false breakout formed, I advised you to open short positions immediately on a rebound by 15-20 points, which happened.
Quite a lot of fundamental reports are expected today. This time we will focus on data on manufacturing activity in the eurozone countries and the United States. A little later, closer to the afternoon, the weekly report on the US labor market will be released. It is unlikely that an improvement in the manufacturing area of the eurozone will help the bulls rise above resistance at 1.1753, which is their key target for today. Being able to settle above this range and testing it from top to bottom creates a good signal to open long positions in continuing the euro's upward correction, already in the area of the 1.1791 high, where I recommend taking profits. The next target will be the 1.1842 level, but its test will lead to the reversal of the bear market, which we have been observing last month. In case we receive weak reports and the euro is under pressure again: the optimal scenario for opening long positions is for a false breakout to form in the support area of 1.1715. If the bulls are not active there, then it is best to postpone long positions until the new local lows 1.1682 and 1.1643 have been tested, from where you can open long positions immediately on a rebound, counting on an upward correction of 15-20 points within the day.
To open short positions on EUR/USD, you need:
Sellers are still in control of the market, and yesterday's upward correction led to a decline, into the oversold level on many indicators. This allows us to expect that the euro would fall further in the short term. During the Asian session, the bears have already come close to support at 1.1715, its breakthrough may result in resuming the downward trend. The main task is to settle below this level and test it from the bottom up, which creates an excellent signal to open short positions. The closest target will be support at 1.1682, and a large level, where I recommend taking profits, is seen in the 1.1643 area. If the report on the eurozone economy manages to surprise traders and turns out to be better than economists' forecasts, then it is possible that the pair will return to the resistance area of 1.1753. In this case, I recommend that you take your time with short positions: the optimal scenario would be an update of the 1.1753 area and form a false breakout there - this will result in creating a signal to open short positions. Selling the pair immediately on a rebound is possible but only from a much larger high like 1.1791, counting on a downward movement of 15-20 points within the day.
The Commitment of Traders (COT) report for March 23 shows that the indicators of long and short positions remained practically unchanged, which indicates a clear lack of willingness to buy euros in the short term. The delta growth was due to a slight decline in short positions, and not because of an influx of new buyers. Traders are now entirely focused on the problems with the EU vaccination program and bureaucratic delays in the implementation of the Recovery Fund - they will be the main reason for the weak growth of the eurozone economy after the Covid-19 pandemic this year, making it lag behind other developed countries. This is reflected in the euro's rate, which continues to lose its positions against the US dollar. For this reason, the market remains on the side of sellers of risky assets, which may lead to forming a succeeding downward trend.
The dollar's position will only strengthen in the event of another round of growth in the yield of ten-year US bonds. Investors expect the United States to be the first to start raising interest rates, which makes the dollar more attractive. At the moment, it is best not to rush into buying euros, but to wait for lower prices. Another factor of medium-term pressure on the euro is the fact that many European countries are in quarantine due to the coronavirus. The recent rollback of social distancing measures has led to new outbreaks of disease in the population, forcing many governments to revert to previous measures. 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 fell to 195,500 from 195,857, while short non-commercial positions fell further from 105,881 to 102,178. As a result, the total non-commercial net position broke its five-week downward trend and slightly rose from 89,976 to 93,332. The weekly closing price was 1.1932 against 1.1926 a week earlier.
Indicator signals:
Moving averages
Trading is carried out above 30 and 50 moving averages, and it is still difficult to say which direction the market will choose.
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
If the euro grows in the first half of the day, the upper border of the indicator around 1.1715 will increase pressure on the euro. A breakthrough of the upper border of the indicator in the area of 1.1753 will lead to an upward correction for the pair.
Description of indicators
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