EUR/USD: trading plan for the US session on October 11th (analysis of morning deals). The euro has problems with growth
October 11, 2023 12:25 pm
In my morning forecast, I drew attention to the level of 1.0616 and recommended making entry decisions based on it. Let’s look at the 5-minute chart and analyze what happened there. The rise and formation of a false breakout at 1.0616, as I mentioned earlier in the first half of the day, led to an excellent entry point for short positions, resulting in a move down by more than 20 points. The technical picture for the second half of the day was slightly revised.
To open long positions on EUR/USD, you need:
Given that buyers failed to offer anything above 1.0616, the focus now shifts to the second half of the day and the reaction to American statistics. We are waiting for data on the US Producer Price Index as well as the release of the FOMC meeting minutes, from which we can draw conclusions about how aggressively the committee members are inclined towards further interest rate hikes. Additionally, speeches by FOMC members Michelle Bowman, Christopher Waller, and Rafael Bostic are scheduled, which could also influence market direction. If the speeches and the minutes point to a real need for further increases in borrowing costs, the dollar may regain some of its position against the euro. If the pair drops, I would prefer to act after the formation of a false breakout around the new support at 1.0595, which was formed based on the first half of the day. This would provide a good entry point for long positions with the expectation of further upward correction. The target will be the new resistance level at 1.0627, also formed during the European session. Breaking and testing this range from top to bottom will open up the chance for a surge towards 1.0651. The ultimate target is the area around 1.0671, where I would take profits. In the case of a EUR/USD decline and a lack of activity at 1.0595 in the second half of the day, pressure on the euro will likely increase, returning trading to a sideways channel. In this case, only the formation of a false breakout around 1.0575, where the moving averages intersect, would signal an entry into the market. I would consider opening long positions only on a rebound from 1.0556 with a target of an intraday upward correction of 30-35 points.
To open short positions on EUR/USD, you need:
Major sellers made themselves known after breaking through a fairly significant resistance level, which was expected. However, a major decline in the pair did not occur, and most likely, the focus is now on protecting the new resistance at 1.0627. Only a false breakout formation there, similar to what I discussed earlier, would signal selling the euro with a move downward to the 1.0595 support. If sellers genuinely want to halt the correction, they should take over this level. After a breakout and a confirmed move below this range, as well as a retest from bottom to top, I expect to receive another selling signal with a move to the 1.0575 minimum level, where the moving averages are located. The ultimate target will be the 1.0556 area, where I would take profits. In the event of further upward movement on EUR/USD during the American session and a lack of bears at 1.0627, which is unlikely to occur, buyers will completely reverse the bearish market observed in recent months. In such a scenario, I would delay short positions until the 1.0651 resistance was reached. Selling could be considered, but only after an unsuccessful breakout. I would consider opening short positions only on a rebound from the 1.0671 maximum level, with the target of a 30-35 point downward correction.
In the COT report (Commitment of Traders), as of October 3rd, there was a minimal increase in long positions and a sharp increase in short positions. It is clear that after central bank meetings, it became clear that interest rates would continue to rise, leading to further strengthening of the US dollar, as indicated by the reports. Moreover, these figures do not yet reflect the changes that occurred after the recent US labor market data, which turned out to be twice as good as economists’ forecasts. The situation in the Middle East does not give confidence to buyers of risky assets, which could increase demand for safe-haven assets, including the US dollar. In the COT report, it is stated that non-commercial long positions increased by only 267 to 211,783, while non-commercial short positions increased by 19,723 to 132,840. As a result, the spread between long and short positions increased by 1,187. The closing price decreased to 1.0509 from 1.0604, indicating a bearish market.
Indicator Signals:
Moving Averages
Trading is conducted above the 30 and 50-day moving averages, indicating the continuation of the upward correction.
Note: The period and prices of moving averages discussed by the author are on the hourly H1 chart and differ from the general definition of classical daily moving averages on the daily D1 chart.
Bollinger Bands
In case of a decline, the lower boundary of the indicator around 1.0595 will act as support.
Description of indicators:
Moving average (determines the current trend by smoothing volatility and noise). Period 50. Marked in yellow on the chart.Moving average (determines the current trend by smoothing volatility and noise). Period 30. Marked in green on the chart.MACD indicator (Moving Average Convergence/Divergence—convergence/divergence of moving averages) Fast EMA period 12. Slow EMA period 26. SMA period 9.Bollinger Bands. Period 20.Non-commercial traders – speculators, such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting specific requirements.Long non-commercial positions represent the total long open positions of non-commercial traders.Short non-commercial positions represent the total short open positions of non-commercial traders.The total non-commercial net position is the difference between the short and long positions of non-commercial traders.The material has been provided by InstaForex Company – www.instaforex.com
In my morning forecast, I drew attention to the level of 1.0616 and recommended making entry decisions based on it. Let’s look at the 5-minute chart and analyze what happened there. The rise and formation of a false breakout at 1.0616, as I mentioned earlier in the first half of the day, led to an excellent entry point for short positions, resulting in a move down by more than 20 points. The technical picture for the second half of the day was slightly revised.
To open long positions on EUR/USD, you need:
Given that buyers failed to offer anything above 1.0616, the focus now shifts to the second half of the day and the reaction to American statistics. We are waiting for data on the US Producer Price Index as well as the release of the FOMC meeting minutes, from which we can draw conclusions about how aggressively the committee members are inclined towards further interest rate hikes. Additionally, speeches by FOMC members Michelle Bowman, Christopher Waller, and Rafael Bostic are scheduled, which could also influence market direction. If the speeches and the minutes point to a real need for further increases in borrowing costs, the dollar may regain some of its position against the euro. If the pair drops, I would prefer to act after the formation of a false breakout around the new support at 1.0595, which was formed based on the first half of the day. This would provide a good entry point for long positions with the expectation of further upward correction. The target will be the new resistance level at 1.0627, also formed during the European session. Breaking and testing this range from top to bottom will open up the chance for a surge towards 1.0651. The ultimate target is the area around 1.0671, where I would take profits. In the case of a EUR/USD decline and a lack of activity at 1.0595 in the second half of the day, pressure on the euro will likely increase, returning trading to a sideways channel. In this case, only the formation of a false breakout around 1.0575, where the moving averages intersect, would signal an entry into the market. I would consider opening long positions only on a rebound from 1.0556 with a target of an intraday upward correction of 30-35 points.
To open short positions on EUR/USD, you need:
Major sellers made themselves known after breaking through a fairly significant resistance level, which was expected. However, a major decline in the pair did not occur, and most likely, the focus is now on protecting the new resistance at 1.0627. Only a false breakout formation there, similar to what I discussed earlier, would signal selling the euro with a move downward to the 1.0595 support. If sellers genuinely want to halt the correction, they should take over this level. After a breakout and a confirmed move below this range, as well as a retest from bottom to top, I expect to receive another selling signal with a move to the 1.0575 minimum level, where the moving averages are located. The ultimate target will be the 1.0556 area, where I would take profits. In the event of further upward movement on EUR/USD during the American session and a lack of bears at 1.0627, which is unlikely to occur, buyers will completely reverse the bearish market observed in recent months. In such a scenario, I would delay short positions until the 1.0651 resistance was reached. Selling could be considered, but only after an unsuccessful breakout. I would consider opening short positions only on a rebound from the 1.0671 maximum level, with the target of a 30-35 point downward correction.
In the COT report (Commitment of Traders), as of October 3rd, there was a minimal increase in long positions and a sharp increase in short positions. It is clear that after central bank meetings, it became clear that interest rates would continue to rise, leading to further strengthening of the US dollar, as indicated by the reports. Moreover, these figures do not yet reflect the changes that occurred after the recent US labor market data, which turned out to be twice as good as economists’ forecasts. The situation in the Middle East does not give confidence to buyers of risky assets, which could increase demand for safe-haven assets, including the US dollar. In the COT report, it is stated that non-commercial long positions increased by only 267 to 211,783, while non-commercial short positions increased by 19,723 to 132,840. As a result, the spread between long and short positions increased by 1,187. The closing price decreased to 1.0509 from 1.0604, indicating a bearish market.
Indicator Signals:
Moving Averages
Trading is conducted above the 30 and 50-day moving averages, indicating the continuation of the upward correction.
Note: The period and prices of moving averages discussed by the author are on the hourly H1 chart and differ from the general definition of classical daily moving averages on the daily D1 chart.
Bollinger Bands
In case of a decline, the lower boundary of the indicator around 1.0595 will act as support.
Description of indicators:
Moving average (determines the current trend by smoothing volatility and noise). Period 50. Marked in yellow on the chart.Moving average (determines the current trend by smoothing volatility and noise). Period 30. Marked in green on the chart.MACD indicator (Moving Average Convergence/Divergence—convergence/divergence of moving averages) Fast EMA period 12. Slow EMA period 26. SMA period 9.Bollinger Bands. Period 20.Non-commercial traders – speculators, such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting specific requirements.Long non-commercial positions represent the total long open positions of non-commercial traders.Short non-commercial positions represent the total short open positions of non-commercial traders.The total non-commercial net position is the difference between the short and long positions of non-commercial traders.The material has been provided by InstaForex Company – www.instaforex.com
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