18.05.202112:27 Forex Analysis & Reviews: EUR/USD: plan for the US session on May 18 (analysis of morning trades)

To open long positions on EURUSD, you need to:

In my morning forecast, I paid attention to the further growth of the euro and advised to buy the pair from the level of 1.2179, which happened. Let's look at the 5-minute chart and analyze the trades. The breakout and consolidation of the euro above the resistance of 1.2179 led to the formation of a signal to open long positions in the continuation of the bull market, which quickly allowed us to get to the level of 1.2208 (+25 points), from where I advised selling immediately on the rebound. To my regret, the expected downward movement from this level did not occur, and the bears very quickly gave up this range, which led to losses.

As you can see from the chart, today's eurozone GDP data for the first quarter of this year did not disappoint traders much, which kept the upward momentum. The eurozone economy shrank by 0.6% earlier this year, in line with economists' expectations. In the second half of the day, the bulls need to focus on protecting the level of 1.2208, as further intraday growth depends on it. The formation of a false breakout, together with weak fundamental statistics on the US economy, will lead to the formation of a good entry point into long positions to update the next maximum in the area of 1.2235, where I recommend fixing the profits. A breakout and a test of this level from top to bottom will lead to additional purchases to update the level of 1.2294. Suppose the bulls miss the support of 1.2208 in the second half of the day. In that case, the stop orders of buyers will likely be demolished below this range, which will quickly dump EUR/USD back to the support of 1.2179, from where you can open long positions immediately for a rebound in the expectation of an upward correction of 15-20 points within the day.

To open short positions on EURUSD, you need to:

Bears are not very active in the market yet. The primary task of sellers will be to return the support of 1.2208 under control. A real breakthrough and a test of this level from the bottom up will force buyers to take profits since below this level. There are several stop orders of speculative players, the demolition of which will lead to a powerful movement of the euro down to the support of 1.2179, where I recommend taking the profits. There are moving averages that play on the side of euro buyers below this level, which will limit the downward potential. If we do not see any activity from sellers in the second half of the day, most likely, the euro will reach the next resistance of 1.2235, from which I recommend opening short positions, but only if a false breakout is formed. You can sell EUR/USD immediately on a rebound only from the maximum of 1.2294. Weak data on the US economy may lead to the continuation of the strengthening of the euro on the trend, especially if the pair has reached new local highs, and no people are willing to sell the euro yet.

Let me remind you that the COT report (Commitment of Traders) for May 11 showed an increase in both short and long positions. However, there were more buyers this time, which led to the continued growth of the overall non-commercial position. Last week, everyone was waiting for data on US inflation, which set the tone. Its sharp increase provided only temporary support to the US dollar. However, traders managed to take advantage of this moment to open long positions after the EUR/USD pair corrected downwards. Only the news that the Fed will raise interest rates will lead to a serious increase in the US dollar. Until then, demand for risky assets will prevail, which will help the euro continue updating its monthly highs in the short term. The COT report shows that long non-profit positions jumped from the level of 206,472 to the level of 223,387, while short non-profit positions rose from 121,643 to the level of 129,480. This indicates an influx of new buyers in the expectation of continued growth of the euro, but with each update of the maximum, there are more and more willing to sell. The total non-profit net position increased from the level of 84,829 to the level of 93,907. The weekly closing price also increased significantly from the level of 1.20591 to 1.21406.

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 daily moving averages, which indicates further growth of the euro.

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

In the event of a decline in the euro, the average border of the indicator in the area of 1.4170 will provide support.

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 specific 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.