EUR/USD: trading plan for European session on May 8. Commitment of Traders. USD fails to rebound following strong labor market
May 8, 2023 9:23 am
Last Friday, there was only one entry point. Now, let’s look at the 5-minute chart and figure out what actually happened. In my morning article, I turned your attention to 1.1029 and recommended making decisions with this level in focus. A decline to this level occurred quite quickly but there was no entry point there. Trading was carried out near 1.1029. In the afternoon, a breakout and an upward retest of 1.0988 led to a sell signal. However, a big downward movement did not take place. As a result, I had to close Stop Loss orders.
When to open long positions on EUR/USD:
The euro dropped sharply following a strong US labor market report. Yet, shortly after, it managed to recover to its previous levels. Curiously enough, EUR bulls were able to take advantage of the situation. The US economy remains resilient despite monetary tightening. Today, there will be no crucial economic reports. Speculators are likely to ignore Germany’s Industrial Production data and the Sentix Investor Confidence Index. Bundesbank Vice President Claudia Buch and ECB official Philippe Lane will deliver speeches.
In my opinion, it is better to open long positions if the pair starts a correction. I will focus on the level of 1.1029, formed on Friday. A false breakout there could provide new entry points into long positions. The pair could rise to the resistance level of 1.1060. A breakout and a downward retest of this level amid positive macro stats on the eurozone will boost the uptrend, giving a buy signal. The pair could climb to a monthly high of 1.1090. A more distant target will be the 1.1129 level where I recommend locking in profits.
If EUR/USD declines and bulls show no activity at 1.1029, which is also quite possible as the pair is moving in the sideways channel, only a false breakout of the support level of 1.0969 may generate new entry points into long positions. You could buy EUR/USD at a bounce from 1.0944, keeping in mind an upward intraday correction of 30-35 pips.
When to open short positions on EUR/USD:
The bears tried really hard to regain the upper hand, especially after an upbeat labor market. Last Friday, they pushed the pair down by more than 60 pips but this was not enough. Bulls regained control. Today, the need to protect the resistance level of 1.1060. A breakout of this level may take place after the release of macros stats on the eurozone. A false breakout of this level and weak could give a sell signal. In this case, the pair is likely to fall to 1.1029 where the moving averages are benefiting the bulls. Consolidation below this range as well as an upward retest of this level will trigger a fall to 1.1000. A more distant target will be the 1.0969 level where I recommend locking in profits.
If EUR/USD rises during the European session bears show no energy at 1.1060, bulls will probably try to continue yesterday’s trend. In this case, it is better to postpone short positions until a false breakout of 1.1090, the upper border of the sideways channel. You can also sell EUR/USD at a bounce from 1.1129, keeping in mind a downward intraday correction of 30-35 pips.
COT report
The COT report (Commitments of Traders) for April 25 logged an increase in long positions and a decrease in short positions. Despite some market moves ahead of the Federal Reserve meeting, where rates will definitely be raised by 0.25%, traders are not in a hurry to close long positions on EUR/USD as they expect more aggressive policy from the European Central Bank. The risk of a recession in the US and a rapid slowdown in the economy, along with problems in the banking sector, also allow traders to bet on growth in risky assets in the medium term, which is beneficial to EUR buyers. The COT report shows that non-commercial long positions rose by 1,147 to 243,516, while non-commercial short positions declined by 3,892 to 74,116. As a result, the total non-commercial net position went up last week to 144,892 against 139,956 a week earlier. EUR/USD closed last week lower at 1.1006 from the closing price of 1.1010 in the previous week.
Indicators’ signals:
Trading is carried out above the 30 and 50 daily moving averages, which indicates bulls’ attempts to take the upper hand.
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 1.1000 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
Last Friday, there was only one entry point. Now, let’s look at the 5-minute chart and figure out what actually happened. In my morning article, I turned your attention to 1.1029 and recommended making decisions with this level in focus. A decline to this level occurred quite quickly but there was no entry point there. Trading was carried out near 1.1029. In the afternoon, a breakout and an upward retest of 1.0988 led to a sell signal. However, a big downward movement did not take place. As a result, I had to close Stop Loss orders.
When to open long positions on EUR/USD:
The euro dropped sharply following a strong US labor market report. Yet, shortly after, it managed to recover to its previous levels. Curiously enough, EUR bulls were able to take advantage of the situation. The US economy remains resilient despite monetary tightening. Today, there will be no crucial economic reports. Speculators are likely to ignore Germany’s Industrial Production data and the Sentix Investor Confidence Index. Bundesbank Vice President Claudia Buch and ECB official Philippe Lane will deliver speeches.
In my opinion, it is better to open long positions if the pair starts a correction. I will focus on the level of 1.1029, formed on Friday. A false breakout there could provide new entry points into long positions. The pair could rise to the resistance level of 1.1060. A breakout and a downward retest of this level amid positive macro stats on the eurozone will boost the uptrend, giving a buy signal. The pair could climb to a monthly high of 1.1090. A more distant target will be the 1.1129 level where I recommend locking in profits.
If EUR/USD declines and bulls show no activity at 1.1029, which is also quite possible as the pair is moving in the sideways channel, only a false breakout of the support level of 1.0969 may generate new entry points into long positions. You could buy EUR/USD at a bounce from 1.0944, keeping in mind an upward intraday correction of 30-35 pips.
When to open short positions on EUR/USD:
The bears tried really hard to regain the upper hand, especially after an upbeat labor market. Last Friday, they pushed the pair down by more than 60 pips but this was not enough. Bulls regained control. Today, the need to protect the resistance level of 1.1060. A breakout of this level may take place after the release of macros stats on the eurozone. A false breakout of this level and weak could give a sell signal. In this case, the pair is likely to fall to 1.1029 where the moving averages are benefiting the bulls. Consolidation below this range as well as an upward retest of this level will trigger a fall to 1.1000. A more distant target will be the 1.0969 level where I recommend locking in profits.
If EUR/USD rises during the European session bears show no energy at 1.1060, bulls will probably try to continue yesterday’s trend. In this case, it is better to postpone short positions until a false breakout of 1.1090, the upper border of the sideways channel. You can also sell EUR/USD at a bounce from 1.1129, keeping in mind a downward intraday correction of 30-35 pips.
COT report
The COT report (Commitments of Traders) for April 25 logged an increase in long positions and a decrease in short positions. Despite some market moves ahead of the Federal Reserve meeting, where rates will definitely be raised by 0.25%, traders are not in a hurry to close long positions on EUR/USD as they expect more aggressive policy from the European Central Bank. The risk of a recession in the US and a rapid slowdown in the economy, along with problems in the banking sector, also allow traders to bet on growth in risky assets in the medium term, which is beneficial to EUR buyers. The COT report shows that non-commercial long positions rose by 1,147 to 243,516, while non-commercial short positions declined by 3,892 to 74,116. As a result, the total non-commercial net position went up last week to 144,892 against 139,956 a week earlier. EUR/USD closed last week lower at 1.1006 from the closing price of 1.1010 in the previous week.
Indicators’ signals:
Trading is carried out above the 30 and 50 daily moving averages, which indicates bulls’ attempts to take the upper hand.
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 1.1000 will serve as resistance.
Description of indicators
The material has been provided by InstaForex Company – www.instaforex.com
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