EUR/USD: trading plan for the US session on April 12th (analysis of morning deals). The euro continues to fall
April 12, 2024 1:24 pm
In my morning forecast, I pointed out the level of 1.0701 and planned to make decisions on market entry based on it. Let’s take a look at the 5-minute chart and analyze what happened there. The breakout at this level occurred, but I never saw a bottom-up retest, eventually missing all the downward movement of the pair. The technical picture was reconsidered for the second half of the day.
To open long positions on EUR/USD, the following is required:
The released inflation statistics of the eurozone countries matched economists’ forecasts, reminding traders how close the European Central Bank is to its plans to lower interest rates, which led to a new sell-off of risky assets. In the second half of the day, equally important figures on the growth of the University of Michigan Consumer Sentiment Index and inflation expectations are expected, so the chances of a correction for euro buyers are quite low. The tough stance of FOMC representatives such as Raphael Bostic and Mary Daly will only increase pressure on the pair. For this reason, I will refrain from rushing into purchases in the current bearish market. I will prefer to act only on declines and after the formation of a false breakout around 1.0642, where the pair is currently heading. This will be a suitable option for buying, counting on a small correction towards the end of the week to around 1.0673. A breakout and renewal above this range will strengthen the pair and give it a chance to surge to 1.0701. The ultimate target will be a maximum of 1.0728, where I will take a profit. This level also coincides with the moving averages, favoring sellers. In the case of a further decline of EUR/USD and a lack of activity around 1.0642 in the second half of the day, the pressure on the euro will only intensify. In such a scenario, I will enter the market only after the formation of a false breakout around the next support at 1.0616. I plan to open long positions on a bounce from 1.0593 with a target of a 30-35 point upward correction within the day.
To open short positions on EUR/USD, the following is required:
Euro sellers have all the chances for further decline, but be careful with sales at the current monthly lows at the end of the week. Hints from the Fed representatives about maintaining a tough stance and strong US data, combined with the formation of a false breakout around the new resistance at 1.0673, will be the perfect scenario for entering short positions with the prospect of renewing support at 1.0642. A breakout and consolidation below this range, as well as a bottom-up retest, will provide another selling point, with the pair moving towards 1.0616, reinforcing the bearish trend. There, I expect more active involvement from large buyers. The ultimate target will be a minimum of 1.0593, where I will take a profit. In the event of an upward movement of EUR/USD in the second half of the day, as well as the absence of bears at 1.0673, bulls will try to recover at least part of the morning decline. In this case, I will postpone sales until the test of the next resistance at 1.0701. I will also sell there, but only after an unsuccessful consolidation. I plan to open short positions on a bounce from 1.0728 with a target of a 30-35 point downward correction.
In the COT report (Commitment of Traders) for April 2nd, there was an increase in long and short positions. However, there were many more euro sellers, especially considering the data on the US labor market, indicating the strength of the economy. Although these indicators still need to be clearly reflected in the report, euro buyers will not have an easy time in the near future. Given the active policy and statements of the European Central Bank representatives, increasingly hinting at a decline in inflation in the eurozone and a possible early abandonment of high-interest rates, the chances of euro growth in the near future are extremely low. For this reason, I bet on further development of the bullish trend for the US dollar and a decline in the euro. The COT report indicates that long non-commercial positions increased by 8,065 to 188,258, while short non-commercial positions jumped by 22,465 to 171,464. As a result, the spread between long and short positions decreased by 2,866.
Indicator signals:
Moving averages
Trading is conducted below the 30 and 50-day moving averages, indicating a further decline of the pair.
Note: The author considers the period and prices of moving averages on the H1 hourly chart and differs from the general definition of classic daily moving averages on the D1 daily chart.
Bollinger Bands
In case of decline, the lower boundary of the indicator, around 1.0673, will act as support.
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). 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 positions 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 pointed out the level of 1.0701 and planned to make decisions on market entry based on it. Let’s take a look at the 5-minute chart and analyze what happened there. The breakout at this level occurred, but I never saw a bottom-up retest, eventually missing all the downward movement of the pair. The technical picture was reconsidered for the second half of the day.
To open long positions on EUR/USD, the following is required:
The released inflation statistics of the eurozone countries matched economists’ forecasts, reminding traders how close the European Central Bank is to its plans to lower interest rates, which led to a new sell-off of risky assets. In the second half of the day, equally important figures on the growth of the University of Michigan Consumer Sentiment Index and inflation expectations are expected, so the chances of a correction for euro buyers are quite low. The tough stance of FOMC representatives such as Raphael Bostic and Mary Daly will only increase pressure on the pair. For this reason, I will refrain from rushing into purchases in the current bearish market. I will prefer to act only on declines and after the formation of a false breakout around 1.0642, where the pair is currently heading. This will be a suitable option for buying, counting on a small correction towards the end of the week to around 1.0673. A breakout and renewal above this range will strengthen the pair and give it a chance to surge to 1.0701. The ultimate target will be a maximum of 1.0728, where I will take a profit. This level also coincides with the moving averages, favoring sellers. In the case of a further decline of EUR/USD and a lack of activity around 1.0642 in the second half of the day, the pressure on the euro will only intensify. In such a scenario, I will enter the market only after the formation of a false breakout around the next support at 1.0616. I plan to open long positions on a bounce from 1.0593 with a target of a 30-35 point upward correction within the day.
To open short positions on EUR/USD, the following is required:
Euro sellers have all the chances for further decline, but be careful with sales at the current monthly lows at the end of the week. Hints from the Fed representatives about maintaining a tough stance and strong US data, combined with the formation of a false breakout around the new resistance at 1.0673, will be the perfect scenario for entering short positions with the prospect of renewing support at 1.0642. A breakout and consolidation below this range, as well as a bottom-up retest, will provide another selling point, with the pair moving towards 1.0616, reinforcing the bearish trend. There, I expect more active involvement from large buyers. The ultimate target will be a minimum of 1.0593, where I will take a profit. In the event of an upward movement of EUR/USD in the second half of the day, as well as the absence of bears at 1.0673, bulls will try to recover at least part of the morning decline. In this case, I will postpone sales until the test of the next resistance at 1.0701. I will also sell there, but only after an unsuccessful consolidation. I plan to open short positions on a bounce from 1.0728 with a target of a 30-35 point downward correction.
In the COT report (Commitment of Traders) for April 2nd, there was an increase in long and short positions. However, there were many more euro sellers, especially considering the data on the US labor market, indicating the strength of the economy. Although these indicators still need to be clearly reflected in the report, euro buyers will not have an easy time in the near future. Given the active policy and statements of the European Central Bank representatives, increasingly hinting at a decline in inflation in the eurozone and a possible early abandonment of high-interest rates, the chances of euro growth in the near future are extremely low. For this reason, I bet on further development of the bullish trend for the US dollar and a decline in the euro. The COT report indicates that long non-commercial positions increased by 8,065 to 188,258, while short non-commercial positions jumped by 22,465 to 171,464. As a result, the spread between long and short positions decreased by 2,866.
Indicator signals:
Moving averages
Trading is conducted below the 30 and 50-day moving averages, indicating a further decline of the pair.
Note: The author considers the period and prices of moving averages on the H1 hourly chart and differs from the general definition of classic daily moving averages on the D1 daily chart.
Bollinger Bands
In case of decline, the lower boundary of the indicator, around 1.0673, will act as support.
Indicator Descriptions:
The material has been provided by InstaForex Company – www.instaforex.com
Related Posts: