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To open long positions on EURUSD, you need to:
The consumer climate in Germany deteriorated in June this year (the indicator has a maximum value), which led to a sharp decline in the euro in the first half of the day. Given the low volatility of trading, it was not possible to wait to form signals to enter the market. The indicated levels were not tested, which preserves the balance of buyers and sellers for the American session. It is necessary to act in the same way as described in the morning forecast.
In the second half of the day, more important fundamental data on the US economy and the labor market are expected, which will allow the pair to get out of the side channel observed today. Buyers of the European currency will still be aimed at returning the resistance of 1.2219. Only a breakout and a test of this area already from top to bottom on the volume can form a new entry point into long positions in the continuation of the upward trend and 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. A more optimal scenario for purchases will be a downward correction to the support area of 1.2179, which we also missed quite a bit in the first half of the day. The formation of a false breakout will be a good entry point to long positions in the expectation of stopping the intraday bearish trend and restoring the pair to the resistance area of 1.2219, where the moving averages are passing, limiting the upward potential. The level of 1.2179 also acts as a kind of lower border of the side channel, in which the pair is now locked. The upper limit of the channel coincides with the maximum of 1.2261. 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 rebuffed the buyers in the area of 1.2219, not even allowing them to test this level. Most likely, they will continue to fight for the continuation of the downward trend of the pair. To do this, they need to break below the level of 1.2179. A repeated test of this area will lead to a breakout of the range. A reverse test from the bottom up will form an excellent signal to open new short positions in continuation of yesterday's downward trend. The immediate target of the bears will be the area of 1.2126, where I recommend fixing the profit. Support for 1.2075 remains the longer-term target. In the case of EUR/USD growth after the release of several data on US GDP and the labor market, only the formation of a false breakdown in the area of 1.2219 forms a new signal to sell the euro in the expectation of a decline in the area of 1.2179 and its breakdown. In the area of 1.2219, there are moving averages that play on the sellers' side. In the absence of bear activity at this level, I recommend postponing short positions until the resistance update at 1.2261, where you can open short positions immediately for a rebound in the expectation 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, the pressure on the euro returned after statements by the President of the European Central Bank, Christine Lagarde, that it is not yet time to wind down the 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 1.2210 indicator will lead to a new wave of growth of the pair.
Description of indicators
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