EUR/USD: trading plan for the US session on October 12th (analysis of morning deals). The market is preparing for inflation
October 12, 2023 2:23 pm
In my morning forecast, I drew attention to the level of 1.0623 and recommended using it to make market entry decisions. Let’s take a look at the 5-minute chart and analyze what happened there. The drop and formation of a false breakout at 1.0623 provided a point of entry for long positions, but the pair didn’t make a significant upward move. Apparently, there aren’t many buyers willing to enter the market before important data releases. In the second half of the day, the technical picture was slightly revised.
To open long positions on EUR/USD, the following is required:
Inflation data is on the horizon. If we consider that the U.S. labor market is showing strength, rising inflation will likely force the Federal Reserve to raise rates in November this year, leading to a decline in the euro and a strengthening of the U.S. dollar. On the other hand, if inflation in the U.S. in September this year decreases, it will provide another reason to buy the euro, especially after all the discussions by Fed officials earlier this week about the high yields of U.S. bonds. In the case of a decline, I would prefer to act after the formation of a false breakout around the new support level of 1.0608, which was established at the end of the first half of the day. This will provide a good entry point for long positions in anticipation of further upward corrections. The target will be the new resistance at 1.0638, which was also established during the European session. A breakthrough and testing of this range from top to bottom will provide an opportunity for a leap to 1.0671. The ultimate target will be the area around 1.0704, where I will make profits. In the case of a decrease in EUR/USD and a lack of activity at 1.0608 in the second half of the day, selling pressure on the euro will increase, returning trading to the sideways channel. In this case, only the formation of a false breakout around 1.0583 will signal an entry into the market. I would open long positions on a bounce from 1.0556 with the target of an upward correction of 30-35 points within the day.
To open short positions on EUR/USD, the following is required:
Everything depends on the data. I would act at the highs only after the formation of a false breakout at 1.0638, which will signal selling the euro with a downward movement to support at 1.0608. Moving averages that favor the bulls mark this level. A breakthrough and consolidation below this range, as well as a reverse test from bottom to top, will lead to another selling signal with a target at the minimum of 1.0583, where euro buyers were active several times yesterday. The ultimate target will be the area around 1.0556, where I would take profits. In the event of further upward movement of EUR/USD during the American session and a lack of bears at 1.0638, which may occur if U.S. inflation drops sharply, the buyers will completely reverse the bearish market that has been observed in recent months. In such a scenario, I would postpone short positions until the resistance at 1.0671. Selling could be considered, but only after an unsuccessful consolidation. I would open short positions on a bounce from 1.0704 with the target of a 30-35 point downward correction.
In the COT report (Commitment of Traders) for October 3, there was a minimal increase in long positions and a sharp increase in short positions. The reports confirm that it became clear following central bank meetings that interest rates would keep rising in the fight against inflation, leading to further strengthening of the U.S. dollar. By the way, these figures do not yet reflect the changes that occurred after recent U.S. labor market data, which turned out to be twice as good as economists’ forecasts. The situation in the Middle East also doesn’t give confidence to buyers of risk assets, which may increase demand for safe-haven assets, including the U.S. dollar. The COT report indicated 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 taking place around the 30 and 50-day moving averages, indicating a sideways market.
Note: The period and prices of the moving averages mentioned by the author are considered on the hourly H1 chart and differ from the general definition of classic daily moving averages on the daily D1 chart.
Bollinger Bands
In the case of a decrease, the lower boundary of the indicator around 1.0600 will act as support.
Description of indicators:
Moving average (determines the current trend by smoothing out volatility and noise). Period 50. Marked in yellow on the chart.Moving average (determines the current trend by smoothing out 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 1.0623 and recommended using it to make market entry decisions. Let’s take a look at the 5-minute chart and analyze what happened there. The drop and formation of a false breakout at 1.0623 provided a point of entry for long positions, but the pair didn’t make a significant upward move. Apparently, there aren’t many buyers willing to enter the market before important data releases. In the second half of the day, the technical picture was slightly revised.
To open long positions on EUR/USD, the following is required:
Inflation data is on the horizon. If we consider that the U.S. labor market is showing strength, rising inflation will likely force the Federal Reserve to raise rates in November this year, leading to a decline in the euro and a strengthening of the U.S. dollar. On the other hand, if inflation in the U.S. in September this year decreases, it will provide another reason to buy the euro, especially after all the discussions by Fed officials earlier this week about the high yields of U.S. bonds. In the case of a decline, I would prefer to act after the formation of a false breakout around the new support level of 1.0608, which was established at the end of the first half of the day. This will provide a good entry point for long positions in anticipation of further upward corrections. The target will be the new resistance at 1.0638, which was also established during the European session. A breakthrough and testing of this range from top to bottom will provide an opportunity for a leap to 1.0671. The ultimate target will be the area around 1.0704, where I will make profits. In the case of a decrease in EUR/USD and a lack of activity at 1.0608 in the second half of the day, selling pressure on the euro will increase, returning trading to the sideways channel. In this case, only the formation of a false breakout around 1.0583 will signal an entry into the market. I would open long positions on a bounce from 1.0556 with the target of an upward correction of 30-35 points within the day.
To open short positions on EUR/USD, the following is required:
Everything depends on the data. I would act at the highs only after the formation of a false breakout at 1.0638, which will signal selling the euro with a downward movement to support at 1.0608. Moving averages that favor the bulls mark this level. A breakthrough and consolidation below this range, as well as a reverse test from bottom to top, will lead to another selling signal with a target at the minimum of 1.0583, where euro buyers were active several times yesterday. The ultimate target will be the area around 1.0556, where I would take profits. In the event of further upward movement of EUR/USD during the American session and a lack of bears at 1.0638, which may occur if U.S. inflation drops sharply, the buyers will completely reverse the bearish market that has been observed in recent months. In such a scenario, I would postpone short positions until the resistance at 1.0671. Selling could be considered, but only after an unsuccessful consolidation. I would open short positions on a bounce from 1.0704 with the target of a 30-35 point downward correction.
In the COT report (Commitment of Traders) for October 3, there was a minimal increase in long positions and a sharp increase in short positions. The reports confirm that it became clear following central bank meetings that interest rates would keep rising in the fight against inflation, leading to further strengthening of the U.S. dollar. By the way, these figures do not yet reflect the changes that occurred after recent U.S. labor market data, which turned out to be twice as good as economists’ forecasts. The situation in the Middle East also doesn’t give confidence to buyers of risk assets, which may increase demand for safe-haven assets, including the U.S. dollar. The COT report indicated 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 taking place around the 30 and 50-day moving averages, indicating a sideways market.
Note: The period and prices of the moving averages mentioned by the author are considered on the hourly H1 chart and differ from the general definition of classic daily moving averages on the daily D1 chart.
Bollinger Bands
In the case of a decrease, the lower boundary of the indicator around 1.0600 will act as support.
Description of indicators:
Moving average (determines the current trend by smoothing out volatility and noise). Period 50. Marked in yellow on the chart.Moving average (determines the current trend by smoothing out 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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