EUR/USD: trading plan for the American session on May 9th (analysis of morning deals). The euro continued to lose positions
May 9, 2023 12:22 pm
In my morning forecast, I drew attention to the level of 1.1000 and recommended making decisions about entering the market from there. Let’s look at the 5-minute chart and figure out what happened there. The growth and formation of a false breakout at 1.1000 led to an excellent sell signal for the euro, which I detailed in my morning forecast, resulting in a nearly 30-point drop in the pair. The technical picture for the second half of the day remained unchanged.
To open long positions on EURUSD, it is required:
Considering that there is no important fundamental data in the second half of the day, the battle should unfold around 1.0969. Good data on the optimism indicator in the small business sector from NFIB in the USA and a speech by FOMC member John Williams should lead to an update of the nearest support level at 1.0969, which we did not reach during the European session. However, I will act on opening long positions on the euro only after forming a false breakout there. This will lead to a buy signal with growth towards resistance at 1.1000, which could not be overcome today. A breakout and top-down test of this range will strengthen buyers’ confidence, returning bullish sentiment to the pair and forming an additional entry point for increasing long positions with an update of the 1.1029 level, just below which the moving averages supporting the bulls are located. The furthest target remains the area of 1.1060, where I will fix the profit.
In the case of a decline in EUR/USD and the absence of buyers at 1.0969, which is quite likely, pressure on the euro will increase. In such a case, only a false breakout around the lower border of the wide sideways channel at 1.0944 will be a reason to buy the euro. I will open long positions on EUR/USD immediately on a rebound only from a minimum of 1.0911, or even lower – in the area of 1.0867, with the target of an upward correction of 30–35 points within the day.
To open short positions on EURUSD, it is required:
Sellers have clarified that it is still too early to write them off and have excellently defended the level of 1.1000. The entire focus will now be on American statistics, as nothing else is planned for the second half of the day. Don’t be surprised if demand for EUR/USD returns, as, in my opinion, trading within a sideways channel is more suitable now. In the case of growth, bears will again get an excellent chance to defend and form a false breakout in the area of 1.1000, forming a good entry point for short positions similar to the one I analyzed above. The prospect of an update will be at the nearest level of 1.0969. Consolidation below this range and a reverse bottom-up test – a direct path to 1.0944. The furthest target will be a minimum of 1.0911, where profits will be fixed.
In the event of an upward movement of EUR/USD during the American session and the absence of bears at 1.1000, which cannot be ruled out given the market character, I will postpone short positions until the 1.1029 level. There, I will also sell only after unsuccessful consolidation. I plan to open short positions immediately on a rebound from the maximum of 1.1060, with a target of a downward correction of 30–35 points.
In the COT report (Commitment of Traders) for May 2, there was a continued growth of long positions and a reduction of short positions. It should be noted that this report still needs to consider the significant changes that occurred in the market after the meetings of the Federal Reserve System and the European Central Bank last week, so it’s not necessary to pay special attention to them. Both central banks raised interest rates by 0.25%, preserving market equilibrium while enabling buyers of risk assets to anticipate further growth. There are no important statistics this week, so traders can relax. The COT report states that long non-commercial positions increased by 3,316 to 246,832, while short non-commercial positions decreased by 773 to 73,343. As a result of the week, the total non-commercial net position increased and amounted to 173,489 against 144,956 a week earlier. The weekly closing price decreased and amounted to 1.1031 against 1.1039.
Indicator signals:
Moving averages
Trading occurs below the 30- and 50-day moving averages, indicating a further decline in the pair.
Note: The author on the H1 chart considers the period and prices of moving averages, which differ from the general definition of classical daily moving averages on the D1 chart.
Bollinger Bands
In the case of growth, the upper border of the indicator at around 1.1025 will act as resistance.
Indicator descriptions
• Moving average (determines the current trend by smoothing volatility and noise). Period 50. Marked in yellow on the chart.
• Moving average (determines the current trend by smoothing volatility and noise). Period 30. Marked in green on the chart.
• MACD indicator (Moving Average Convergence/Divergence – convergence/divergence of moving averages) Fast EMA period 12. Slow EMA period 26. SMA period 9
• Bollinger Bands. Period 20
• Non-commercial traders – speculators such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting 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.
• The 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 forecast, I drew attention to the level of 1.1000 and recommended making decisions about entering the market from there. Let’s look at the 5-minute chart and figure out what happened there. The growth and formation of a false breakout at 1.1000 led to an excellent sell signal for the euro, which I detailed in my morning forecast, resulting in a nearly 30-point drop in the pair. The technical picture for the second half of the day remained unchanged.
To open long positions on EURUSD, it is required:
Considering that there is no important fundamental data in the second half of the day, the battle should unfold around 1.0969. Good data on the optimism indicator in the small business sector from NFIB in the USA and a speech by FOMC member John Williams should lead to an update of the nearest support level at 1.0969, which we did not reach during the European session. However, I will act on opening long positions on the euro only after forming a false breakout there. This will lead to a buy signal with growth towards resistance at 1.1000, which could not be overcome today. A breakout and top-down test of this range will strengthen buyers’ confidence, returning bullish sentiment to the pair and forming an additional entry point for increasing long positions with an update of the 1.1029 level, just below which the moving averages supporting the bulls are located. The furthest target remains the area of 1.1060, where I will fix the profit.
In the case of a decline in EUR/USD and the absence of buyers at 1.0969, which is quite likely, pressure on the euro will increase. In such a case, only a false breakout around the lower border of the wide sideways channel at 1.0944 will be a reason to buy the euro. I will open long positions on EUR/USD immediately on a rebound only from a minimum of 1.0911, or even lower – in the area of 1.0867, with the target of an upward correction of 30–35 points within the day.
To open short positions on EURUSD, it is required:
Sellers have clarified that it is still too early to write them off and have excellently defended the level of 1.1000. The entire focus will now be on American statistics, as nothing else is planned for the second half of the day. Don’t be surprised if demand for EUR/USD returns, as, in my opinion, trading within a sideways channel is more suitable now. In the case of growth, bears will again get an excellent chance to defend and form a false breakout in the area of 1.1000, forming a good entry point for short positions similar to the one I analyzed above. The prospect of an update will be at the nearest level of 1.0969. Consolidation below this range and a reverse bottom-up test – a direct path to 1.0944. The furthest target will be a minimum of 1.0911, where profits will be fixed.
In the event of an upward movement of EUR/USD during the American session and the absence of bears at 1.1000, which cannot be ruled out given the market character, I will postpone short positions until the 1.1029 level. There, I will also sell only after unsuccessful consolidation. I plan to open short positions immediately on a rebound from the maximum of 1.1060, with a target of a downward correction of 30–35 points.
In the COT report (Commitment of Traders) for May 2, there was a continued growth of long positions and a reduction of short positions. It should be noted that this report still needs to consider the significant changes that occurred in the market after the meetings of the Federal Reserve System and the European Central Bank last week, so it’s not necessary to pay special attention to them. Both central banks raised interest rates by 0.25%, preserving market equilibrium while enabling buyers of risk assets to anticipate further growth. There are no important statistics this week, so traders can relax. The COT report states that long non-commercial positions increased by 3,316 to 246,832, while short non-commercial positions decreased by 773 to 73,343. As a result of the week, the total non-commercial net position increased and amounted to 173,489 against 144,956 a week earlier. The weekly closing price decreased and amounted to 1.1031 against 1.1039.
Indicator signals:
Moving averages
Trading occurs below the 30- and 50-day moving averages, indicating a further decline in the pair.
Note: The author on the H1 chart considers the period and prices of moving averages, which differ from the general definition of classical daily moving averages on the D1 chart.
Bollinger Bands
In the case of growth, the upper border of the indicator at around 1.1025 will act as resistance.
Indicator descriptions
• Moving average (determines the current trend by smoothing volatility and noise). Period 50. Marked in yellow on the chart.
• Moving average (determines the current trend by smoothing volatility and noise). Period 30. Marked in green on the chart.
• MACD indicator (Moving Average Convergence/Divergence – convergence/divergence of moving averages) Fast EMA period 12. Slow EMA period 26. SMA period 9
• Bollinger Bands. Period 20
• Non-commercial traders – speculators such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting 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.
• The 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
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