EUR/USD: trading plan for European session on May 16, 2023. Commitments of Traders. Overview of yesterday’s trading. The
May 16, 2023 9:23 am
Yesterday, several entry signals were made. Let’s look at the 5-minute chart to get a picture of what happened. In my morning article, I turned your attention to 1.0881 and recommended making decisions with this level in focus. In the first part of the day, growth and a false breakout through the mark produced a sell signal. The pair went down by more than 20 points. In the second part of the day, the same signal was formed, but the price dropped even less.
COT report:
The COT report for May 9 logged an increase in both long and short positions. This report already takes into account significant changes that took place in the market after the Federal Reserve and European Central Bank, and, as we can see, there are clearly more and more people willing to buy. At the same time, the euro’s bearish correction which we observed last week, will be a good reason to increase long positions – just a good fundamental reason is needed for this. Given that there is no important data this week, and only a sufficient number of central bank representatives are speaking, one can expect the pressure on the pair to continue. According to the COT report, non-commercial long positions grew by 13,503 to 260,335, and non-commercial short positions jumped by 7,570, to 80,913. As a result, the overall non-commercial net position increased to 179,422 against 173,489, recorded a week before. The weekly closing price dropped to 1.0992 from 1.1031.
Conditions for opening long positions on EUR/USD:
Today there are quite a lot of data that can harm the euro, so it’s clearly better not to rush with long positions. Negative figures are expected for the ZEW business sentiment indices in Germany and the eurozone, as well as for the GDP report for the first quarter of 2023. Data on changes in employment levels and the balance of trade balance will not be of great interest, which cannot be said about the speech of ECB President Christine Lagarde, but it is scheduled for the second part of the day.
In case of a negative reaction, it would be good to see the bulls show up around the support around 1.0858. A false breakout will create a buy entry point, in hopes of a recovery and a correction with an update of the nearest resistance level at 1.0890. A breakout and an upward test of this range will also produce a buy entry point with an update of 1.0935. Going beyond this range may boost the demand for the euro with the target at a high of 1.0967, where I will lock in profit. The most distant target remains at 1.0998.
In the case of a decline in EUR/USD and the absence of the bulls at 1.0858, which is quite likely, as today’s fundamental data will not bring anything good, the pressure on the euro will increase. In this case, only a false breakout around the new monthly low of 1.0833 will make a signal to buy the euro. I will open long positions immediately on a bounce from a low of 1.0790, or even lower around 1.0748, allowing an upward correction of 30-35 pips intraday.
Conditions for opening short positions on EUR/USD:
The bears are in control, and in case of growth, they need to be assertive around 1.0890, which is in line with the bearish moving averages. A false breakout will produce a sell signal in support of the downtrend. This can push the pair to the nearest support at 1.0858, a breakout and consolidation below this range, as well as an upside retest, the price will likely head toward 1.0833. The euro may go beyond this level in the second part of the day after European Central Bank President Christine Lagarde’s comments. The target will be the support level at 1.0790, where I will lock in profit.
In case of growth in EUR/USD during the European session and the absence of the bears at 1.0890, which will only be likely in case we receive great data on Germany and the eurozone, the bulls will not regain control of the market, but the pressure on the euro will weaken. In this case, I will open short positions at the 1.0935 level but only after failed consolidation. I will open short positions immediately on a bounce from a high of 1.0967, or even higher from 1.0998, allowing a downward correction of 30-35 pips.
Signals of indicators:
Moving Averages
Trading is carried out in the area of the 30-day and 50-day moving averages, which indicates a sideways trend.
Note: The author considers the period and prices of moving averages on the one-hour chart which differs from the general definition of the classic daily moving averages on the daily chart.
Bollinger Bands
In case of a decline, the lower limit of the indicator located around 1.0858 will act as support. In case of growth, the upper limit of the indicator located around 1.0890 will act as resistance.
Description of indicators
Moving average (a moving average determines the current trend by smoothing volatility and noise). The period is 50. It is marked in yellow on the chart.
Moving average (a moving average determines the current trend by smoothing volatility and noise). The period is 30. It is marked in green on the graph.
MACD indicator (Moving Average Convergence/Divergence – convergence/divergence of moving averages). A fast EMA period is 12. A slow EMA period is 26. The SMA period is 9.
Bollinger Bands. The period is 20.
Non-profit speculative traders are individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
Long non-commercial positions are the total number of long positions opened by non-commercial traders.
Short non-commercial positions are the total number of short positions opened by non-commercial traders.
The total non-commercial net position is a difference in the number of short and long positions opened by non-commercial traders.
The material has been provided by InstaForex Company – www.instaforex.com
Yesterday, several entry signals were made. Let’s look at the 5-minute chart to get a picture of what happened. In my morning article, I turned your attention to 1.0881 and recommended making decisions with this level in focus. In the first part of the day, growth and a false breakout through the mark produced a sell signal. The pair went down by more than 20 points. In the second part of the day, the same signal was formed, but the price dropped even less.
COT report:
The COT report for May 9 logged an increase in both long and short positions. This report already takes into account significant changes that took place in the market after the Federal Reserve and European Central Bank, and, as we can see, there are clearly more and more people willing to buy. At the same time, the euro’s bearish correction which we observed last week, will be a good reason to increase long positions – just a good fundamental reason is needed for this. Given that there is no important data this week, and only a sufficient number of central bank representatives are speaking, one can expect the pressure on the pair to continue. According to the COT report, non-commercial long positions grew by 13,503 to 260,335, and non-commercial short positions jumped by 7,570, to 80,913. As a result, the overall non-commercial net position increased to 179,422 against 173,489, recorded a week before. The weekly closing price dropped to 1.0992 from 1.1031.
Conditions for opening long positions on EUR/USD:
Today there are quite a lot of data that can harm the euro, so it’s clearly better not to rush with long positions. Negative figures are expected for the ZEW business sentiment indices in Germany and the eurozone, as well as for the GDP report for the first quarter of 2023. Data on changes in employment levels and the balance of trade balance will not be of great interest, which cannot be said about the speech of ECB President Christine Lagarde, but it is scheduled for the second part of the day.
In case of a negative reaction, it would be good to see the bulls show up around the support around 1.0858. A false breakout will create a buy entry point, in hopes of a recovery and a correction with an update of the nearest resistance level at 1.0890. A breakout and an upward test of this range will also produce a buy entry point with an update of 1.0935. Going beyond this range may boost the demand for the euro with the target at a high of 1.0967, where I will lock in profit. The most distant target remains at 1.0998.
In the case of a decline in EUR/USD and the absence of the bulls at 1.0858, which is quite likely, as today’s fundamental data will not bring anything good, the pressure on the euro will increase. In this case, only a false breakout around the new monthly low of 1.0833 will make a signal to buy the euro. I will open long positions immediately on a bounce from a low of 1.0790, or even lower around 1.0748, allowing an upward correction of 30-35 pips intraday.
Conditions for opening short positions on EUR/USD:
The bears are in control, and in case of growth, they need to be assertive around 1.0890, which is in line with the bearish moving averages. A false breakout will produce a sell signal in support of the downtrend. This can push the pair to the nearest support at 1.0858, a breakout and consolidation below this range, as well as an upside retest, the price will likely head toward 1.0833. The euro may go beyond this level in the second part of the day after European Central Bank President Christine Lagarde’s comments. The target will be the support level at 1.0790, where I will lock in profit.
In case of growth in EUR/USD during the European session and the absence of the bears at 1.0890, which will only be likely in case we receive great data on Germany and the eurozone, the bulls will not regain control of the market, but the pressure on the euro will weaken. In this case, I will open short positions at the 1.0935 level but only after failed consolidation. I will open short positions immediately on a bounce from a high of 1.0967, or even higher from 1.0998, allowing a downward correction of 30-35 pips.
Signals of indicators:
Moving Averages
Trading is carried out in the area of the 30-day and 50-day moving averages, which indicates a sideways trend.
Note: The author considers the period and prices of moving averages on the one-hour chart which differs from the general definition of the classic daily moving averages on the daily chart.
Bollinger Bands
In case of a decline, the lower limit of the indicator located around 1.0858 will act as support. In case of growth, the upper limit of the indicator located around 1.0890 will act as resistance.
Description of indicators
The material has been provided by InstaForex Company – www.instaforex.com
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