EUR/USD: trading plan for the US session on October 18th (analysis of morning deals). Inflation in the eurozone remains unchanged
October 18, 2023 12:23 pm
In my morning forecast, I drew attention to the level of 1.0594 and recommended using it to make entry decisions. Let’s take a look at the 5-minute chart and analyze what happened there. The rise and the formation of a false breakout at 1.0594 provided an excellent entry point for short positions, resulting in a move down of more than 30 points. The technical picture hasn’t changed for the second half of the day.
To open long positions on EUR/USD, you need:
The released data on inflation for September confirmed that prices in the Eurozone were rising at a slower pace than in August, causing the euro to drop. Whether EUR/USD will continue to decline depends on the data on building permits issued and the number of new foundations laid in the US. Strong figures will lead to a larger sell-off, but one should not forget about several speeches by Federal Reserve representatives. The closest support level of 1.0563 may be able to relieve some of the pressure on the euro because policymakers have recently been making many dovish statements, despite incoming statistics. In the event of a pair’s decline, I prefer to act after a false breakout is formed at this level, which will signal entry into long positions with the target of retesting resistance at 1.0594. Only a breakthrough and a test from top to bottom of this range against the backdrop of weak US statistics will strengthen demand for the euro, giving it a chance for further correction and a move to 1.0617. The most distant target will be around 1.0638, where I will take a profit. In the case of a EUR/USD decline and a lack of activity at 1.0563 in the second half of the day, where moving averages are located, playing on the buyer’s side, bears will not regain control of the market, but trading may remain within a sideways channel. In this case, only the formation of a false breakout around 1.0540 will signal to buy the euro. I will open long positions only on a rebound from 1.0517, with the target of a 30-35 point intraday uptrend.
To open short positions on EUR/USD, you need:
Sellers have already shown themselves around 1.0594, and as long as trading occurs below this range, the pressure on the euro will not disappear. In the event of a pair’s rise and a bullish reaction to statements by American politicians, only the formation of another false breakout at 1.0594 will signal a sell-off down to 1.0563. It will be possible to talk about controlling the market only after a breakthrough and consolidation below this range, as well as a reverse test from the bottom to the top, which will signal a sell-off to 1.0540. The ultimate target will be the minimum of 1.0517, where I will take a profit. In the case of an upward movement of EUR/USD during the American session and a lack of bears at 1.0594, this will be the third test of this level in the past two days, and buyers may achieve a breakthrough at this level. In such a scenario, I will postpone short positions until the resistance reaches 1.0617. Selling can be considered, but only after an unsuccessful consolidation. I will open short positions immediately on a rebound from the maximum of 1.0638, with the target of a 30-35 point downtrend.
In the COT report (Commitment of Traders) for October 10, there was a decrease in both long and short positions. Given the recent US data and the high inflation rate in September this year, many traders and economists have doubts about whether the Federal Reserve will continue to pause or raise borrowing costs during the November meeting. Given the war between Israel and Hamas, as well as a number of negative consequences for the global economy, the demand for risky assets has sharply decreased, which is an additional negative factor for the European currency. The tough stance of the European Central Bank is another problem for the euro as the Eurozone economy continues to contract. The only positive aspect is the significantly lower euro, which continues to attract traders’ attention. The COT report states that non-commercial long positions decreased by 4,261 to the level of 207,522, while non-commercial short positions decreased by only 850 to the level of 131,990. As a result, the spread between long and short positions decreased by 5,519. The closing price increased to 1.0630 from 1.0509, confirming a slight upward correction in the euro.
Indicator signals:
Moving averages
Trading is carried out around the 30- and 50-day moving averages, indicating a sideways market.
Note: The period and prices of the moving averages discussed by the author are on the hourly chart (H1) and differ from the general definition of classic daily moving averages on the daily chart (D1).
Bollinger Bands
In the case of a decline, the lower boundary of the indicator around 1.0560 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) 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 1.0594 and recommended using it to make entry decisions. Let’s take a look at the 5-minute chart and analyze what happened there. The rise and the formation of a false breakout at 1.0594 provided an excellent entry point for short positions, resulting in a move down of more than 30 points. The technical picture hasn’t changed for the second half of the day.
To open long positions on EUR/USD, you need:
The released data on inflation for September confirmed that prices in the Eurozone were rising at a slower pace than in August, causing the euro to drop. Whether EUR/USD will continue to decline depends on the data on building permits issued and the number of new foundations laid in the US. Strong figures will lead to a larger sell-off, but one should not forget about several speeches by Federal Reserve representatives. The closest support level of 1.0563 may be able to relieve some of the pressure on the euro because policymakers have recently been making many dovish statements, despite incoming statistics. In the event of a pair’s decline, I prefer to act after a false breakout is formed at this level, which will signal entry into long positions with the target of retesting resistance at 1.0594. Only a breakthrough and a test from top to bottom of this range against the backdrop of weak US statistics will strengthen demand for the euro, giving it a chance for further correction and a move to 1.0617. The most distant target will be around 1.0638, where I will take a profit. In the case of a EUR/USD decline and a lack of activity at 1.0563 in the second half of the day, where moving averages are located, playing on the buyer’s side, bears will not regain control of the market, but trading may remain within a sideways channel. In this case, only the formation of a false breakout around 1.0540 will signal to buy the euro. I will open long positions only on a rebound from 1.0517, with the target of a 30-35 point intraday uptrend.
To open short positions on EUR/USD, you need:
Sellers have already shown themselves around 1.0594, and as long as trading occurs below this range, the pressure on the euro will not disappear. In the event of a pair’s rise and a bullish reaction to statements by American politicians, only the formation of another false breakout at 1.0594 will signal a sell-off down to 1.0563. It will be possible to talk about controlling the market only after a breakthrough and consolidation below this range, as well as a reverse test from the bottom to the top, which will signal a sell-off to 1.0540. The ultimate target will be the minimum of 1.0517, where I will take a profit. In the case of an upward movement of EUR/USD during the American session and a lack of bears at 1.0594, this will be the third test of this level in the past two days, and buyers may achieve a breakthrough at this level. In such a scenario, I will postpone short positions until the resistance reaches 1.0617. Selling can be considered, but only after an unsuccessful consolidation. I will open short positions immediately on a rebound from the maximum of 1.0638, with the target of a 30-35 point downtrend.
In the COT report (Commitment of Traders) for October 10, there was a decrease in both long and short positions. Given the recent US data and the high inflation rate in September this year, many traders and economists have doubts about whether the Federal Reserve will continue to pause or raise borrowing costs during the November meeting. Given the war between Israel and Hamas, as well as a number of negative consequences for the global economy, the demand for risky assets has sharply decreased, which is an additional negative factor for the European currency. The tough stance of the European Central Bank is another problem for the euro as the Eurozone economy continues to contract. The only positive aspect is the significantly lower euro, which continues to attract traders’ attention. The COT report states that non-commercial long positions decreased by 4,261 to the level of 207,522, while non-commercial short positions decreased by only 850 to the level of 131,990. As a result, the spread between long and short positions decreased by 5,519. The closing price increased to 1.0630 from 1.0509, confirming a slight upward correction in the euro.
Indicator signals:
Moving averages
Trading is carried out around the 30- and 50-day moving averages, indicating a sideways market.
Note: The period and prices of the moving averages discussed by the author are on the hourly chart (H1) and differ from the general definition of classic daily moving averages on the daily chart (D1).
Bollinger Bands
In the case of a decline, the lower boundary of the indicator around 1.0560 will act as support.
Description of indicators:
The material has been provided by InstaForex Company – www.instaforex.com
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