EUR/USD: trading plan for American session on May 16. Analysis of morning trades. EUR bulls make new attempts to initiate
May 16, 2023 12:22 pm
In my morning article, I turned your attention to 1.0890 and recommended making decisions with this level in focus. Now, let’s look at the 5-minute chart and figure out what actually happened. A rise and a false breakout of this level in the morning led to an excellent sell signal. However, it did not cause a significant downward movement. Trading was carried out around this level. Therefore, I decided to close short positions and revised the technical outlook.
When to open long positions on EUR/USD:
An upward movement of the euro was limited by weak data on the ZEW Economic Sentiment Index from Germany. High interest can hardly be called a positive factor for European businesses as they affect lending conditions. today, the US will unveil the retail sales and industrial production reports. If both indicators decline, bulls will have the opportunity to maintain a correction.
In my opinion, it is better to keep long positions bearing in mind a correction from 1.0873. The moving averages that are benefiting the bulls are passing there. A false breakout and a sharp decline in US retail sales will provide new entry points into long positions. The pair may rise to the resistance level of 1.0912. Only a breakout and a downward retest of this level after speeches of Fed policymakers could stimulate demand for the euro and give a new buy signal. The price could reach a high of 1.0948. A more distant target will be the 1.0998 level where I recommend locking in profits.
If EUR/USD declines and bulls show no activity at 1.0873 in the afternoon, which is quite likely as a jump in retail sales will certainly force the Fed to raise interest rates, a bearish trend may begin. Only a false breakout of the next support level of 1.0833 will give new entry points into long positions. You could buy EUR/USD at a bounce from 1.0790, keeping in mind an upward intraday correction of 30-35 pips.
When to open short positions on EUR/USD:
Bears are not in a hurry to return to the market yet but they are not going to give up without a fight. They managed to defend 1.0890. However, traders are unwilling to sell the euro before the release of the US macro stats. For this reason, only the protection of the nearest resistance of 1.0912 will give an excellent signal to go long. A false breakout of this level, by analogy with what I have analyzed above, will trigger a sell signal. The pair may fall to 1.0873. Consolidation below this level as well as an upward retest may trigger a decline to a monthly low of 1.0833. A more distant target will be the 1.0790 level where I recommend locking in profits.
If EUR/USD rises during the US session and bears show no energy at 1.0912, bulls could try to return to the market. In this case, I would advise you to postpone short positions until a false breakout of 1.0948. You could sell EUR/USD at a bounce from 1.0998, keeping in mind a downward intraday correction of 30-35 pips.
COT report
According to the COT report (Commitment of Traders) for May 9, there was a rise in long and short positions. This report takes into account the changes that have taken place in the market after the Fed and ECB meetings. The majority of traders are increasing long positions on the euro. A new downward correction which already occurred last week will provide a buy signal. The euro needs new strong drivers to start a correction. Given that there are no important reports this week and only a few speeches from Fed officials, the pressure on the pair may continue. The COT report indicates that long non-commercial positions jumped by 13,503 to 260,335, while short non-commercial positions advanced by 7,570 to 80,913. At the end of the week, the total non-commercial net position increased to 179,422 against 173,489 a week earlier. The weekly closing price declined to 1.0992 against 1.1031.
Indicators’ signals:
Trading is carried out above the 30 and 50 daily moving averages, which indicates the continuation of an upward correction.
Moving averages
Note: The period and prices of moving averages are considered by the author on the H1 (1-hour) chart and differ from the general definition of the classic daily moving averages on the daily D1 chart.
Bollinger Bands
If EUR/USD rises, the indicator’s upper border at 1.0895 will serve as resistance.
Description of indicators
Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked yellow on the chart.
Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked green on the chart.
MACD indicator (Moving Average Convergence/Divergence – convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
Bollinger Bands (Bollinger Bands). Period 20
Non-commercial 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.
The material has been provided by InstaForex Company – www.instaforex.com
In my morning article, I turned your attention to 1.0890 and recommended making decisions with this level in focus. Now, let’s look at the 5-minute chart and figure out what actually happened. A rise and a false breakout of this level in the morning led to an excellent sell signal. However, it did not cause a significant downward movement. Trading was carried out around this level. Therefore, I decided to close short positions and revised the technical outlook.
When to open long positions on EUR/USD:
An upward movement of the euro was limited by weak data on the ZEW Economic Sentiment Index from Germany. High interest can hardly be called a positive factor for European businesses as they affect lending conditions. today, the US will unveil the retail sales and industrial production reports. If both indicators decline, bulls will have the opportunity to maintain a correction.
In my opinion, it is better to keep long positions bearing in mind a correction from 1.0873. The moving averages that are benefiting the bulls are passing there. A false breakout and a sharp decline in US retail sales will provide new entry points into long positions. The pair may rise to the resistance level of 1.0912. Only a breakout and a downward retest of this level after speeches of Fed policymakers could stimulate demand for the euro and give a new buy signal. The price could reach a high of 1.0948. A more distant target will be the 1.0998 level where I recommend locking in profits.
If EUR/USD declines and bulls show no activity at 1.0873 in the afternoon, which is quite likely as a jump in retail sales will certainly force the Fed to raise interest rates, a bearish trend may begin. Only a false breakout of the next support level of 1.0833 will give new entry points into long positions. You could buy EUR/USD at a bounce from 1.0790, keeping in mind an upward intraday correction of 30-35 pips.
When to open short positions on EUR/USD:
Bears are not in a hurry to return to the market yet but they are not going to give up without a fight. They managed to defend 1.0890. However, traders are unwilling to sell the euro before the release of the US macro stats. For this reason, only the protection of the nearest resistance of 1.0912 will give an excellent signal to go long. A false breakout of this level, by analogy with what I have analyzed above, will trigger a sell signal. The pair may fall to 1.0873. Consolidation below this level as well as an upward retest may trigger a decline to a monthly low of 1.0833. A more distant target will be the 1.0790 level where I recommend locking in profits.
If EUR/USD rises during the US session and bears show no energy at 1.0912, bulls could try to return to the market. In this case, I would advise you to postpone short positions until a false breakout of 1.0948. You could sell EUR/USD at a bounce from 1.0998, keeping in mind a downward intraday correction of 30-35 pips.
COT report
According to the COT report (Commitment of Traders) for May 9, there was a rise in long and short positions. This report takes into account the changes that have taken place in the market after the Fed and ECB meetings. The majority of traders are increasing long positions on the euro. A new downward correction which already occurred last week will provide a buy signal. The euro needs new strong drivers to start a correction. Given that there are no important reports this week and only a few speeches from Fed officials, the pressure on the pair may continue. The COT report indicates that long non-commercial positions jumped by 13,503 to 260,335, while short non-commercial positions advanced by 7,570 to 80,913. At the end of the week, the total non-commercial net position increased to 179,422 against 173,489 a week earlier. The weekly closing price declined to 1.0992 against 1.1031.
Indicators’ signals:
Trading is carried out above the 30 and 50 daily moving averages, which indicates the continuation of an upward correction.
Moving averages
Note: The period and prices of moving averages are considered by the author on the H1 (1-hour) chart and differ from the general definition of the classic daily moving averages on the daily D1 chart.
Bollinger Bands
If EUR/USD rises, the indicator’s upper border at 1.0895 will serve as resistance.
Description of indicators
The material has been provided by InstaForex Company – www.instaforex.com
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