EUR/USD: trading plan for European session on October 5, 2023. COT report and overview of yesterday’s trades. The euro regained
October 5, 2023 9:27 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 1.0485 as a possible entry point. A rise and a false breakout at this mark formed a sell signal but the pair failed to move down. As a result, I had to close positions with losses. The second half of the day was much better. A failed consolidation above 1.0524 and a buy signal moved the price down by almost 40 pips. Defending the support level at 1.0485 and a buy signal made it possible for traders to take about 30 pips more profit.
For long positions on EUR/USD:
Weak reports on the U.S. services sector and the September ADP indicating a sharp slowdown in payroll growth had frightened the dollar bulls, which extended the euro’s corrective rise in the second half of the day. In today’s European session, except for the speeches of European Central Bank board members Philip Lane and Joachim Nagel, there are no scheduled reports, so the bulls may try to cling to yesterday’s highs. For this reason, I will act near the nearest support at 1.0504, formed yesterday. A false breakout around that mark will confirm the entry point for long positions, in hopes of building an upward correction and updating the nearest resistance at 1.0532. A breakout and a downward test of this range, bolstered by dovish remarks from ECB officials, will provide a chance for a surge to 1.0560. The furthest target would be the 1.0588 area, where I plan to take profits. If EUR/USD declines and there is no activity at 1.0504, and just below this level we have the moving averages, pressure on the euro could increase. In such a case, only a false breakout near 1.0478 will signal a buying opportunity. I will open long positions directly on a rebound from 1.0450, aiming for an upward correction of 30-35 pips within the day.
For short positions on EUR/USD:
The sellers have slightly loosened their grip, but it does not mean that something serious has happened to the market direction. The most that buyers can achieve is to lock the pair in a sideways channel before tomorrow’s U.S. labor market report. In this case, the bears need to defend the new resistance at 1.0532. A false breakout there will provide an entry point, targeting the low of 1.0504. Only after breaching this range and settling below it, on the back of aggressive remarks of the ECB officials, and after completing an upward retest, do I anticipate another sell signal with a target at a new low of 1.0478, where I expect significant buyer activity. The furthest target is the 1.0450 area, where I plan to take profit. If EUR/USD moves upward during the European session and lacks bearish activity at 1.0532, bulls might attempt an upward correction. In such a scenario, I would delay short positions until the price hits the resistance at 1.0560. 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 1.0588, considering a downward correction of 30-35 pips.
COT report:
The COT report for September 26 showed a rise in both long and short positions, with the latter being almost twice as many. Adverse shifts in the Eurozone’s economic landscape and looming threats of further interest rate hikes by the European Central Bank (ECB) have bolstered the prevailing bearish sentiment. Statements by ECB President Christine Lagarde were quite hawkish. Even the news about slowing inflation in August failed to help the euro withstand pressure from large sellers. A cheaper euro looks more appealing to traders in the medium term which is confirmed by the rise in long positions. The COT report indicates that non-commercial long positions jumped by 4,092 to stand at 211,516, while non-commercial short positions saw an increase of 7,674, reaching a total of 113,117. As a result, the spread between long and short positions increased by 1,216 contracts. The closing price dropped to 1.0604 from 1.0719, further underscoring the bearish market sentiment for EUR/USD.
Indicator signals:
Moving averages:
Trading above the 30- and 50-day moving averages indicates that buyers are trying to extend the upward correction.
a further downtrend 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 around 1.0495 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 1.0485 as a possible entry point. A rise and a false breakout at this mark formed a sell signal but the pair failed to move down. As a result, I had to close positions with losses. The second half of the day was much better. A failed consolidation above 1.0524 and a buy signal moved the price down by almost 40 pips. Defending the support level at 1.0485 and a buy signal made it possible for traders to take about 30 pips more profit.
For long positions on EUR/USD:
Weak reports on the U.S. services sector and the September ADP indicating a sharp slowdown in payroll growth had frightened the dollar bulls, which extended the euro’s corrective rise in the second half of the day. In today’s European session, except for the speeches of European Central Bank board members Philip Lane and Joachim Nagel, there are no scheduled reports, so the bulls may try to cling to yesterday’s highs. For this reason, I will act near the nearest support at 1.0504, formed yesterday. A false breakout around that mark will confirm the entry point for long positions, in hopes of building an upward correction and updating the nearest resistance at 1.0532. A breakout and a downward test of this range, bolstered by dovish remarks from ECB officials, will provide a chance for a surge to 1.0560. The furthest target would be the 1.0588 area, where I plan to take profits. If EUR/USD declines and there is no activity at 1.0504, and just below this level we have the moving averages, pressure on the euro could increase. In such a case, only a false breakout near 1.0478 will signal a buying opportunity. I will open long positions directly on a rebound from 1.0450, aiming for an upward correction of 30-35 pips within the day.
For short positions on EUR/USD:
The sellers have slightly loosened their grip, but it does not mean that something serious has happened to the market direction. The most that buyers can achieve is to lock the pair in a sideways channel before tomorrow’s U.S. labor market report. In this case, the bears need to defend the new resistance at 1.0532. A false breakout there will provide an entry point, targeting the low of 1.0504. Only after breaching this range and settling below it, on the back of aggressive remarks of the ECB officials, and after completing an upward retest, do I anticipate another sell signal with a target at a new low of 1.0478, where I expect significant buyer activity. The furthest target is the 1.0450 area, where I plan to take profit. If EUR/USD moves upward during the European session and lacks bearish activity at 1.0532, bulls might attempt an upward correction. In such a scenario, I would delay short positions until the price hits the resistance at 1.0560. 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 1.0588, considering a downward correction of 30-35 pips.
COT report:
The COT report for September 26 showed a rise in both long and short positions, with the latter being almost twice as many. Adverse shifts in the Eurozone’s economic landscape and looming threats of further interest rate hikes by the European Central Bank (ECB) have bolstered the prevailing bearish sentiment. Statements by ECB President Christine Lagarde were quite hawkish. Even the news about slowing inflation in August failed to help the euro withstand pressure from large sellers. A cheaper euro looks more appealing to traders in the medium term which is confirmed by the rise in long positions. The COT report indicates that non-commercial long positions jumped by 4,092 to stand at 211,516, while non-commercial short positions saw an increase of 7,674, reaching a total of 113,117. As a result, the spread between long and short positions increased by 1,216 contracts. The closing price dropped to 1.0604 from 1.0719, further underscoring the bearish market sentiment for EUR/USD.
Indicator signals:
Moving averages:
Trading above the 30- and 50-day moving averages indicates that buyers are trying to extend the upward correction.
a further downtrend 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 around 1.0495 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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