EUR/USD: trading plan for European session on October 19, 2023. COT report and overview of yesterday’s trades. A step away
October 19, 2023 9:25 am
Yesterday, the pair formed several entry signals. Let’s have a look at what happened on the 5-minute chart. In my morning review, I mentioned the level of 1.0594 as a possible entry point. A rise and a false breakout at this mark formed a sell signal, sending the pair down by more than 30 pips. In the afternoon, a breakout and retest of 1.0563 provided another sell signal and the pair fell to the 1.0540 area.
For long positions on EUR/USD:
The statements of American politicians are in contrast to the incoming data, indicating an undefined position for the US economy and the need for further rate hikes to fight inflation. Considering that we only have the release of the European Central Bank’s report on the balance of payments in the first half of the day, the euro will likely remain under pressure, and the market will focus on Federal Reserve Chairman Jerome Powell’s speech, which will take place during the US session. We will delve into that in the forecast for the afternoon. In case the pair falls, I will act near the new support level at 1.0517, formed on Monday. A false breakout at this mark will confirm the entry point for long positions, in hopes of building an upward correction, which can be broken at any minute. The target will be the resistance level at 1.0540. A breakout and a downward test of this range will provide a chance for a surge to 1.0563, which is in line with the bearish moving averages. The furthest target would be the 1.0594 area, where I plan to take profits. If EUR/USD declines and there is no activity at 1.0517, pressure on the euro could increase, and the bears will reclaim the upper hand. In such a case, only a false breakout near 1.0497 will signal a buying opportunity. I will open long positions directly on a rebound from 1.0474, aiming for an upward correction of 30-35 pips within the day.
For short positions on EUR/USD:
Sellers continue to dominate the market. In order for the pair to fall, the bears need to defend the nearest resistance at 1.0540. A false breakout there will provide an entry point, targeting the support level at 1.0517. Only after breaching this range and settling below it, and after completing an upward retest, do I anticipate another sell signal with a target at 1.0497. The furthest target is the 1.0474 low, where I plan to take profit. If EUR/USD moves upward during the European session and lacks bearish activity at 1.0540, bulls will return the pair to the sideways channel with the prospect of continuing the upward correction. In such a scenario, I would delay short positions until the price hits the resistance at 1.0563. I would also consider selling there but only after an unsuccessful consolidation. I will open short positions directly on a rebound from the high of 1.0594, considering a downward correction of 30-35 pips.
COT report:
The Commitments of Traders report for October 10 recorded a fall in both long and short positions. Given the recent US data and the high inflation rate in September, many traders and economists have doubts about whether the Federal Reserve will take a pause or continue to raise interest rates in the November meeting. Considering the war between Israel and Hamas, as well as a number of negative consequences for the world economy, the demand for risky assets in the current conditions has also sharply decreased, which doesn’t help the euro’s case. The ECB’s tight stance is another problem as the eurozone economy continues to contract. The only positive thing is that the euro has significantly depreciated in value, which continues to attract the attention of traders. The COT report indicates that non-commercial long positions fell by 4,261 to stand at 207,522, while non-commercial short positions were down by 850, reaching a total of 131,990. As a result, the spread between long and short positions fell by 5,519. The closing price rose to 1.0630 from 1.0509, confirming a slight bullish correction in the euro.
Indicator signals:
Moving averages:
Trading below the 30- and 50-day moving averages indicates a possible decline in the pair.
Please note that the time period and levels of the moving averages are analyzed only for the H1 chart, which differs from the general definition of the classic daily moving averages on the D1 chart.
Bollinger Bands
If EUR/USD declines, the indicator’s lower border near 1.0520 will serve as support.
Description of indicators:
• A moving average of a 50-day period determines the current trend by smoothing volatility and noise; marked in yellow on the chart;
• A moving average of a 30-day period determines the current trend by smoothing volatility and noise; marked in green on the chart;
• MACD Indicator (Moving Average Convergence/Divergence) Fast EMA with a 12-day period; Slow EMA with a 26-day period. SMA with a 9-day period;
• Bollinger Bands: 20-day period;
• Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements;
• Long non-commercial positions represent the total number of long positions opened by non-commercial traders;
• Short non-commercial positions represent the total number of short positions opened by non-commercial traders;
• The non-commercial net position is the difference between short and long positions of non-commercial traders.
The material has been provided by InstaForex Company – www.instaforex.com
Yesterday, the pair formed several entry signals. Let’s have a look at what happened on the 5-minute chart. In my morning review, I mentioned the level of 1.0594 as a possible entry point. A rise and a false breakout at this mark formed a sell signal, sending the pair down by more than 30 pips. In the afternoon, a breakout and retest of 1.0563 provided another sell signal and the pair fell to the 1.0540 area.
For long positions on EUR/USD:
The statements of American politicians are in contrast to the incoming data, indicating an undefined position for the US economy and the need for further rate hikes to fight inflation. Considering that we only have the release of the European Central Bank’s report on the balance of payments in the first half of the day, the euro will likely remain under pressure, and the market will focus on Federal Reserve Chairman Jerome Powell’s speech, which will take place during the US session. We will delve into that in the forecast for the afternoon. In case the pair falls, I will act near the new support level at 1.0517, formed on Monday. A false breakout at this mark will confirm the entry point for long positions, in hopes of building an upward correction, which can be broken at any minute. The target will be the resistance level at 1.0540. A breakout and a downward test of this range will provide a chance for a surge to 1.0563, which is in line with the bearish moving averages. The furthest target would be the 1.0594 area, where I plan to take profits. If EUR/USD declines and there is no activity at 1.0517, pressure on the euro could increase, and the bears will reclaim the upper hand. In such a case, only a false breakout near 1.0497 will signal a buying opportunity. I will open long positions directly on a rebound from 1.0474, aiming for an upward correction of 30-35 pips within the day.
For short positions on EUR/USD:
Sellers continue to dominate the market. In order for the pair to fall, the bears need to defend the nearest resistance at 1.0540. A false breakout there will provide an entry point, targeting the support level at 1.0517. Only after breaching this range and settling below it, and after completing an upward retest, do I anticipate another sell signal with a target at 1.0497. The furthest target is the 1.0474 low, where I plan to take profit. If EUR/USD moves upward during the European session and lacks bearish activity at 1.0540, bulls will return the pair to the sideways channel with the prospect of continuing the upward correction. In such a scenario, I would delay short positions until the price hits the resistance at 1.0563. I would also consider selling there but only after an unsuccessful consolidation. I will open short positions directly on a rebound from the high of 1.0594, considering a downward correction of 30-35 pips.
COT report:
The Commitments of Traders report for October 10 recorded a fall in both long and short positions. Given the recent US data and the high inflation rate in September, many traders and economists have doubts about whether the Federal Reserve will take a pause or continue to raise interest rates in the November meeting. Considering the war between Israel and Hamas, as well as a number of negative consequences for the world economy, the demand for risky assets in the current conditions has also sharply decreased, which doesn’t help the euro’s case. The ECB’s tight stance is another problem as the eurozone economy continues to contract. The only positive thing is that the euro has significantly depreciated in value, which continues to attract the attention of traders. The COT report indicates that non-commercial long positions fell by 4,261 to stand at 207,522, while non-commercial short positions were down by 850, reaching a total of 131,990. As a result, the spread between long and short positions fell by 5,519. The closing price rose to 1.0630 from 1.0509, confirming a slight bullish correction in the euro.
Indicator signals:
Moving averages:
Trading below the 30- and 50-day moving averages indicates a possible decline in the pair.
Please note that the time period and levels of the moving averages are analyzed only for the H1 chart, which differs from the general definition of the classic daily moving averages on the D1 chart.
Bollinger Bands
If EUR/USD declines, the indicator’s lower border near 1.0520 will serve as support.
Description of indicators:
• A moving average of a 50-day period determines the current trend by smoothing volatility and noise; marked in yellow on the chart;
• A moving average of a 30-day period determines the current trend by smoothing volatility and noise; marked in green on the chart;
• MACD Indicator (Moving Average Convergence/Divergence) Fast EMA with a 12-day period; Slow EMA with a 26-day period. SMA with a 9-day period;
• Bollinger Bands: 20-day period;
• Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements;
• Long non-commercial positions represent the total number of long positions opened by non-commercial traders;
• Short non-commercial positions represent the total number of short positions opened by non-commercial traders;
• The non-commercial net position is the difference between short and long positions of non-commercial traders.
The material has been provided by InstaForex Company – www.instaforex.com
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