24.05.202115:27 Forex Analysis & Reviews: EUR/USD: plan for the US session on May 24 (analysis of morning trades)

To open long positions on EURUSD, you need to:

In the first half of the day, buyers of the European currency achieved a breakdown of the level of 1.2205, which I paid attention to in my morning forecast. Let's look at the 5-minute chart and talk about how we should have acted. A breakout with consolidation above the resistance of 1.2205 and its reverse test from top to bottom formed a good signal for opening long positions in the European currency. However, at the time of writing, there is no particular activity on the part of the bulls, and the movement up from this level was only 10 points.

Until the moment when trading will be conducted above this range, you can bet on further strengthening of the euro in the expectation of updating to a new local high of 1.2243. This level also coincides with the upper limit of the broad side channel in which the euro has been since the middle of last week. Given that nothing interesting comes out of the fundamental statistics in the second half of the day, the bears may be able to pull the market to their side and regain control over the level of 1.2205. In this case, I recommend opening new long positions only if a false breakout is formed in the area of 1.2205, or immediately on a rebound from the lower border of the side channel 1.2163, based on an upward correction of 15-20 points within the day. In case of further growth of the euro, the main target of the bulls will be a breakdown of the resistance of 1.2243. 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 in the expectation of updating the next monthly maximum in the area of 1.2294, where I recommend fixing the profits. The next target will be the level of 1.2347.

To open short positions on EURUSD, you need to:

The bears, after missing the resistance of 1.2205, are not yet willing to return to the market. Their main task for the second half of the day is to regain control of this level. Testing this area from the bottom up will lead to the formation of a good entry point in the expectation of a downward correction to the support area of 1.2163, where I recommend taking the profits. A more distant target will be the minimum of 1.2103. In the scenario of euro growth in the second half of the day after the speeches of representatives of the Federal Reserve System, it is best not to rush to short positions: the optimal scenario for selling will be the formation of a false breakout in the resistance area of 1.2243. You can sell EUR/USD immediately for a rebound only from a larger local high in the area of 1.2294, based on a downward correction of 15-20 points within the day.

Let me remind you that the COT report (Commitment of Traders) for May 11 showed an increase in both short and long positions. Last week, everyone was waiting for data on US inflation, which set the tone. Its sharp growth 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 is going to 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 to continue to update 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 the level of 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 in the area of 30 and 50 daily moving averages, which indicates the sideways nature of the market.

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 1.2163 will lead to a decrease in the euro. A break of the upper limit of the indicator in the area of 1.2210 will lead to new growth of the European currency.

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.