EUR/USD: trading plan for US session on June 30. Overview of morning trades. Euro loses ground as inflation cools down
June 30, 2023 10:24 am
In the previous forecast, I drew your attention to the level of 1.0855 and recommended making market entry decisions from it. Let’s take a look at the 5-minute chart and analyze the situation there. The decline and the formation of a false breakout at this level provided a buying signal. However, inflation data in the Eurozone showed a decrease, which prevented the buying signal from materializing.
Long positions on EUR/USD:
A decrease in inflation in the eurozone will allow the European Central Bank to take a softer approach to future interest rate policies. However, it is still too early to speak of significant successes. High underlying prices will surely compel the ECB to continue acting more aggressively. In the second half of the day, there will be several reports that can exert pressure on the euro. Attention will be drawn to figures on the core personal consumption expenditure index, as well as changes in levels of spending and income in the US. Data on the Chicago PMI index and the University of Michigan consumer sentiment index will also be in the spotlight.
In the case of further decline in the pair, which is currently the trend, I will only act on the decrease and the formation of a false breakout in the area around 1.0816. This will provide a new buy signal, allowing for the recovery of part of the morning losses and test 1.0855, which previously acted as support. Only a breakthrough and a top-down test of this range may restore demand for the euro, giving it a chance to reach the high of 1.0900. The next target remains in the area of 1.1040, where traders may take profits. If there is a scenario of a decline in the EUR/USD pair due to strong statistics from the US and a lack of buyers at 1.0816, the pressure on the pair will only increase at the end of the month. Therefore, only the formation of a false breakout in the area of the next support level at 1.0777, established based on yesterday’s results, will provide a buy signal for the euro. One may open long positions from the high of 1.0734, allowing an upward intraday correction of 30-35 pips.
Short positions on EUR/USD:
Bears continued to put pressure on the euro, gaining control over 1.0855. The main task for the second half of the day will be to protect this level. The pair may reach it in case of relatively weak fundamental statistics from the US. I prefer to act only on a false breakout, which will give a sell signal capable of pushing the EUR/USD pair to 1.0816. A breakthrough below this range and a test from below will pave the way to 1.0777. The next target will be the low of 1.0734, where one may take profits.
In case of an upward movement in the pair during the US session and the absence of bears at 1.0855, bulls are likely to regain control of the market. In such a scenario, it would be better to postpone short positions until the pair reaches the resistance level of 1.0900. Selling can also be done there, but only after an unsuccessful consolidation. One may open short positions on a rebound from the high of 1.0940, allowing a downward correction of 30-35 points.
COT report:
In the COT report for June 13, there was a reduction in both long and short positions. However, it should be understood that the report was released before the Federal Reserve’s decision on interest rates, which remained unchanged in June of this year and significantly affected the market balance. For this reason, there is no need to pay special attention to the current report. What is important is that the demand for the euro has been maintained due to the continued aggressive policies of the European Central Bank and will continue to be so. The optimal medium-term strategy under current conditions is to buy the euro on declines. The COT report indicates that non-commercial long positions decreased by 9,922 to 226,138, while non-commercial short positions fell by 3,323 to 74,316. The overall non-commercial net position decreased to 151,822 from 158,224 at the end of the week. The weekly closing price increased to 1.0794 from 1.0702.
Signals of indicators:
Moving Averages:
The pair is trading below the 30-day and 50-day moving averages, indicating further decline in the pair.
Note: The author considers the period and prices of the moving averages on the hourly H1 chart, which differs from the general definition of classical daily moving averages on the daily D1 chart.
Bollinger Bands:
In case of an increase, the upper boundary of the indicator near 1.0900 will act as resistance.
Description of indicators:
Moving Average determines the current trend by smoothing out volatility and noise. Period 50. Marked in yellow on the chart.
Moving Average determines the current trend by smoothing out volatility and noise. Period 30. Marked in green on the chart.
MACD Indicator (Moving Average Convergence/Divergence): Fast EMA period: 12. Slow EMA period: 26. SMA period: 9.
Bollinger Bands. Period 20.
Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting certain requirements.
Non-commercial long positions represent the total long open positions of non-commercial traders.
Non-commercial short positions represent the total short open positions of non-commercial traders.
Total non-commercial net position represents the difference between non-commercial short and long positions.
The material has been provided by InstaForex Company – www.instaforex.com
Long positions on EUR/USD:
A decrease in inflation in the eurozone will allow the European Central Bank to take a softer approach to future interest rate policies. However, it is still too early to speak of significant successes. High underlying prices will surely compel the ECB to continue acting more aggressively. In the second half of the day, there will be several reports that can exert pressure on the euro. Attention will be drawn to figures on the core personal consumption expenditure index, as well as changes in levels of spending and income in the US. Data on the Chicago PMI index and the University of Michigan consumer sentiment index will also be in the spotlight.
In the case of further decline in the pair, which is currently the trend, I will only act on the decrease and the formation of a false breakout in the area around 1.0816. This will provide a new buy signal, allowing for the recovery of part of the morning losses and test 1.0855, which previously acted as support. Only a breakthrough and a top-down test of this range may restore demand for the euro, giving it a chance to reach the high of 1.0900. The next target remains in the area of 1.1040, where traders may take profits. If there is a scenario of a decline in the EUR/USD pair due to strong statistics from the US and a lack of buyers at 1.0816, the pressure on the pair will only increase at the end of the month. Therefore, only the formation of a false breakout in the area of the next support level at 1.0777, established based on yesterday’s results, will provide a buy signal for the euro. One may open long positions from the high of 1.0734, allowing an upward intraday correction of 30-35 pips.
Short positions on EUR/USD:
Bears continued to put pressure on the euro, gaining control over 1.0855. The main task for the second half of the day will be to protect this level. The pair may reach it in case of relatively weak fundamental statistics from the US. I prefer to act only on a false breakout, which will give a sell signal capable of pushing the EUR/USD pair to 1.0816. A breakthrough below this range and a test from below will pave the way to 1.0777. The next target will be the low of 1.0734, where one may take profits.
In case of an upward movement in the pair during the US session and the absence of bears at 1.0855, bulls are likely to regain control of the market. In such a scenario, it would be better to postpone short positions until the pair reaches the resistance level of 1.0900. Selling can also be done there, but only after an unsuccessful consolidation. One may open short positions on a rebound from the high of 1.0940, allowing a downward correction of 30-35 points.
COT report:
In the COT report for June 13, there was a reduction in both long and short positions. However, it should be understood that the report was released before the Federal Reserve’s decision on interest rates, which remained unchanged in June of this year and significantly affected the market balance. For this reason, there is no need to pay special attention to the current report. What is important is that the demand for the euro has been maintained due to the continued aggressive policies of the European Central Bank and will continue to be so. The optimal medium-term strategy under current conditions is to buy the euro on declines. The COT report indicates that non-commercial long positions decreased by 9,922 to 226,138, while non-commercial short positions fell by 3,323 to 74,316. The overall non-commercial net position decreased to 151,822 from 158,224 at the end of the week. The weekly closing price increased to 1.0794 from 1.0702.
Signals of indicators:
Moving Averages:
The pair is trading below the 30-day and 50-day moving averages, indicating further decline in the pair.
Note: The author considers the period and prices of the moving averages on the hourly H1 chart, which differs from the general definition of classical daily moving averages on the daily D1 chart.
Bollinger Bands:
In case of an increase, the upper boundary of the indicator near 1.0900 will act as resistance.
Description of indicators:
The material has been provided by InstaForex Company – www.instaforex.com
Related Posts: