Yesterday, several market entry signals were formed. I suggest you take a look at the 5-minute chart and figure out what happened. I paid attention to the level of 1.0700 in my morning forecast and advised you to make a decision on entering the market from it. The lack of news affected the volatility of the euro, which was trading in a narrow horizontal channel in the first half of the day. A breakthrough of the nearest resistance level of 1.0700 took place without a reverse test of this level from top to bottom, so I did not wait for signals to enter the market. The technical picture changed a bit in the afternoon. As a result of the decline and a false breakout forming around 1.0695, an excellent signal to buy the euro was formed, which brought more than 30 points of profit as the euro was under pressure again during the US session due to a weak report on GDP growth.

When to go long on EUR/USD:

The disappointing performance of the US economy in the first quarter of this year raised the pressure on the dollar, which Asian traders took advantage of, continuing the upward trend of the EUR/USD pair and achieving new monthly highs. However, be careful with long positions at current levels, as it happens at the end of the month and it is possible that large players may start taking profits, which will lead to some downward correction. This morning there are no serious statistics in the euro area that can support a further bullish trend. It is necessary to pay attention to the change in the aggregate M3 of the money supply and the volume of lending to the private sector of the eurozone. The optimal scenario for opening long positions would be long positions in the intermediate support area of 1.0734, formed at the end of the Asian session. A false breakout at this level will give a signal to buy the euro in continuation of the bullish scenario and in the expectation of reaching new highs in the 1.0779 area. A breakthrough and test from top to bottom of this range creates a new signal for entering long positions, opening up the possibility of updating 1.0811.

It will be possible to get to a more distant target in the area of 1.0844 only if we receive disappointing data on the level of income and expenses of Americans in the afternoon. In case EUR/USD falls and bulls are not active at 1.0734, the pressure on the euro will seriously increase. Bulls may start taking profits in anticipation of a larger downward correction. In this case, I advise you not to rush into long positions. The best option would be a false breakout near the low of 1.0691, where the moving averages are. I advise you to open longs immediately for a rebound only from the level of 1.0645, or even lower - in the area of 1.0603, counting on an upward correction of 30-35 points within the day.

When to go short on EUR/USD:

Bears continue to take a wait-and-see attitude, although yesterday they did their best to prevent the breakdown of monthly highs. To return the pressure on the euro, it is necessary to return the pair to the level of 1.0734, which will be quite easy to do in case we receive disappointing statistics on the eurozone in the first half of the day. In case the euro moves up, I advise you to focus your attention on the nearest resistance at 1.0779. Forming a false breakout there creates an excellent signal to open short positions against the trend with the prospect of returning to support at 1.0734 - the level formed by the results of morning trading. A breakthrough and consolidation below 1.0734, as well as a reverse test from the bottom up of this range - all this will lead to a signal for short positions with dismantling of bulls' stops and a larger movement of the pair down to the 1.0691 area, where the moving averages are passing. There you can think about partial profit taking.

A more distant target will be the area of 1.0645, where I recommend completely leaving short positions. Reaching this level will be very problematic given the lack of important statistics. If EUR/USD moves higher in the morning, and there are no bears at 1.0779, the upward trend will continue, which will strengthen the bulls' confidence that they are worthy of new highs. The best option in this case would be short positions in forming a false breakout in the area of 1.0811. You can sell EUR/USD immediately on a rebound from 1.0844, or even higher - in the area of 1.0894, counting on a downward correction of 30-35 points.

COT report:

The Commitment of Traders (COT) report for May 17 showed that long positions have further increased while short positions decreased. Traders continue to buy on the bottom, relying on new evidence and statements from representatives of the European Central Bank, which is serious about starting to raise interest rates in the near future. Representatives of various central banks of the eurozone have repeatedly spoken about this last week.

The ECB Governing Council is now expected to raise its deposit rate by a quarter point as early as July this year, then in September and once in December, bringing it to 0.25% by the end of the year. However, even this plan causes a number of criticisms from European politicians who demand more active actions from the ECB aimed at combating high inflation in the eurozone. The key interest rate is expected to be raised in September and December to 0.5% from its current zero level. The euro's potential for growth may also be fueled by rumors that the Federal Reserve may slow down in September with a further increase in interest rates after aggressive policy changes in the spring-summer period.

The COT report shows that long non-commercial positions increased by 2,540 from 228,230 to 230,770, while short non-commercial positions decreased by -1,270 from 211,701 to 210,431. The euro makes it more attractive for traders, and the change in the balance of power in favor of the bulls confirms this. As a result of the week, the total non-commercial net position increased and amounted to 20,339 against 16,529 a week earlier. The weekly closing price almost also slightly increased and amounted to 1.0556 against 1.0546.

Indicator signals:

Moving averages

Trading is above the 30 and 50-day moving averages, which indicates a continuation of the bull market.

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

Bollinger Bands

In the event of a decline, the lower border of the indicator around 1.0691 will act as support. In case of growth, the upper border of the indicator in the area of 1.0780 will act as resistance.

Description of indicators

• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in 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 short and long positions of non-commercial traders.