EUR/USD: plan for the European session on May 19. COT reports (analysis of yesterday’s trade). Buyers and sellers are building

By | May 19, 2020
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EUR/USD: plan for the European session on May 19. COT reports (analysis of yesterday's trade)

Relevance up to 23:00 2020-05-19 UTC–5

To open long positions on EUR/USD, you need:

In yesterday’s review, I advised you to buy the euro after a false breakout in the area of 1.0808, which happened, and the demand for EUR/USD sharply grew during the US session, which led to a fairly large upward correction. If you look at the 5 minute chart, then it was possible to open a long position in the euro after the breakout and then consolidate above the resistance 1.0849, which quickly brought the pair to the highs 1.0895 and 1.0923, where you can open short positions, as I also mentioned in my prediction for the second half of the day. The sharp rise in the euro may be directly related to the good news about the successful test of the coronavirus vaccine. The Commitment of Traders (COT) reports for May 12 recorded an increase in both short and long positions, but now the market is flocking to the side of buyers of the European currency, as the Delta has increased, which indicates some advantage for the bulls in the current conditions. Given that today there will be regular speeches by senior US officials, including the Finance Minister and the Federal Reserve chief, and they will be associated with possible new aid packages for the economy, demand for the euro could be sustained. The report shows an increase in short non-profit positions from the level of 92,973 to 93,840, while long non-profit positions also increased from the level of 169,272 to 171,980. As a result, the positive non-commercial net position increased slightly to 78,140, against 76,299, indicating an increase in interest in purchasing risky assets at current prices. As for the intraday strategy, buyers will focus on the resistance of 1.0923, since a break and consolidation at this level will lead to a continuation of the upward correction to the highs of 1.0972 and 1.1013, where I recommend taking profits. An important task will be to hold the 1.0886 area and form a false breakout on it, which will also be a signal to open long positions in the euro. The moving average test will be an additional point in this development of the situation. If there are no active purchases in the area of 1.0886 and growth does not resume, the bulls will doubt the seriousness of yesterday’s momentum and retreat to the support area of 1.0855. It is best to open long positions immediately for a rebound from the low of 1.0808 while expecting a correction of 30-40 points within the day.

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To open short positions on EUR/USD, you need:

Sellers will act quite accurately on a false breakdown in the resistance area of 1.0923, since any statements by the Fed chief on the topic of the possible allocation of aid can cause the euro to sharply strengthen. If pressure does not form after a false breakdown in the resistance area of 1.0923, it is best to postpone short positions until the test of larger highs 1.0972 and 1.1013 and open short positions therefrom immediately for a rebound while expecting a correction of 30-35 points within a day. An important task for the bears is to return EUR/USD to the support level of 1.0886, afterwards, it will be possible to talk about damping the bullish momentum and you can expect an update of lows to 1.0855 with the support test of 1.0808, where I recommend taking profit.

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Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 moving average, which indicates forming a new upward trend.

Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differs from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger bands

Further growth will be limited by the upper level of the indicator in the area of 1.0965. In case the euro falls, it is possible to open long positions immediately for a rebound from the lower border of the indicator in the region of 1.0808.

Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence – moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-profit traders – speculators, such as individual traders, hedge funds and large institutions that use the futures market for speculative purposes and meet certain requirements.
  • Long nonprofit positions represent the total long open position of nonprofit traders.
  • Short nonprofit positions represent the total short open position of nonprofit traders.
  • The total non-profit net position is the difference between short and long positions of non-profit traders.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Performed by Ruben Watson,
Analytical expert
InstaForex Group © 2007-2020

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