In my morning forecast, I paid attention to the 1.0603 level and recommended that decisions on entering the market be made from it. Let’s look at the 5-minute chart and figure out what happened there. Another attempt to break above 1.0603 failed again.
Despite the statements of the President of the European Central Bank, Christine Lagarde, her concern about inflation and the situation in the bond market, buyers of the euro have not managed to break above 1.0603. All this led to the formation of a false breakdown and a signal to open short positions. At the time of writing, the pair has gone down about 25 points. Against this background, the technical picture, as well as the strategy itself, remained unchanged. And what were the entry points for the pound?
o open long positions on EURUSD, you need: Until the moment when trading is conducted below 1.0603, we can expect a larger movement of the pair down. During the American session, data on the balance of foreign trade in goods in the United States and the consumer confidence index are released, which is likely to have a limited impact on the market. I expect further low volatility and trading in the upper part of the 1.0497 – 1.0603 side channel.
In the case of strong reports, which will be quite surprising for the market, as well as a decline in the pair, the key task of the bulls will remain to protect the nearest level of 1.0552, which acts as the middle boundary of the side channel. Moving averages pass just above this range, so the formation of a false breakdown there forms a signal to open long positions in the hope of trying to regain the 1.0603 area – the upper limit. A breakout and a top-down test of 1.0603 in the afternoon will deal a very strong blow to the bears’ stop orders, which will allow the pair to break out of the side channel with the possibility of updating 1.0640 and building a new uptrend to 1.0663 and 1.0687. A more distant target will be the 1.0714 area, where I recommend fixing the profits.
If EUR/USD declines and there are no buyers at 1.0552, nothing terrible will happen – the pair will only move to the lower part of the side channel. In this case, I advise you not to rush into the market: the best option for opening long positions will be a false breakdown in the support area of 1.0497. I advise buying EUR/USD immediately for a rebound only from the level of 1.0448, or even lower – around 1.0388 with the aim of an upward correction of 30-35 points within a day.