EUR/USD: trading plan for the US session on October 20th (analysis of morning deals). Euro buyers remain active
October 20, 2023 1:24 pm
In my morning forecast, I drew attention to the level of 1.0586 and recommended making trading decisions based on it. 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 1.0586 led to a signal to sell the euro. However, as of the time of writing this article, there has been no significant downward movement. In the second half of the day, the technical picture was completely reassessed.
To open long positions on EUR/USD, the following is required:
During the American session, there are no fundamental data releases, so all attention will be focused on the speeches of FOMC member Patrick T. Harker and FOMC member Loretta Mester. It’s unlikely that we will hear anything new from them that they haven’t already mentioned this week, especially after Federal Reserve Chairman Jerome Powell made it clear yesterday that no one intends to raise rates just like that. For this reason, the rise of the euro may continue. However, in the current conditions, it’s preferable to act after a decline and the formation of a false breakout at the level of 1.0568, which was formed at the end of the first half of the day. Moving averages pass through that level, which would provide a signal for entering long positions with the target of updating the resistance at 1.0612, which the euro bumped into just yesterday. Only a breakthrough and a top-down test of this range against the backdrop of soft statements from Federal Reserve representatives will strengthen the demand for EUR/USD, offering a chance for further correction and a push towards 1.0638. The ultimate target will be the area of 1.0671, where I would take a profit. In the event of a EUR/USD decline and a lack of activity around 1.0568 in the second half of the day, the bears may pull the pair into a sideways channel. In this case, only the formation of a false breakout around 1.0531 would signal a euro buy. I would open long positions only on a rebound from 1.0497 with the target of an upward correction within the day of 30-35 points.
To open short positions on EUR/USD, the following is required:
Sellers have not yet shown themselves, and active purchases around 1.0586 have not been recorded. For this reason, I removed this level from the chart. Currently, it is best for bears to focus on defense and the formation of a false breakout around 1.0612, from where you can get a sell signal with a downward movement towards the new support at 1.0568. We can only talk about market control after a breakthrough and consolidation below this range, as well as a bottom-up retest, which would lead to a sell signal with a target of 1.0531. The ultimate target will be the minimum of 1.0497, where I would take a profit. In the event of an upward movement of EUR/USD during the American session, given the soft statements by the Federal Reserve Chairman and the absence of bears at 1.0612, the bullish market may continue. In this scenario, I would delay short positions until the resistance at 1.0638, which represents this month’s high. You can sell there, but only after an unsuccessful breakout. I would open short positions immediately on a rebound from 1.0671 with a target of a downward correction of 30-35 points.
In the Commitment of Traders (COT) report for October 10, both long and short positions decreased. Given the recent U.S. data releases and the high inflation in September, many traders and economists have doubts about whether the Federal Reserve will continue to pause or raise borrowing costs during the November meeting. Considering the ongoing conflict between Israel and Hamas, as well as a series of negative consequences for the global economy, the demand for risky assets has sharply declined, which is an additional negative factor for the European currency. The European Central Bank’s tough stance is another problem for the euro as the Eurozone’s economy continues to contract. The only positive aspect is the significantly cheaper euro, which continues to attract traders’ attention. The COT report indicates 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 and reached 1.0630, compared to 1.0509, confirming a small upward correction in the euro.
Indicator Signals:
Moving Averages
Trading is taking place just above the 30 and 50-day moving averages, indicating the potential for further growth of the euro.
Note: The author considers the period and prices of the moving averages on the hourly chart (H1), which differs from the general definition of classical daily moving averages on the daily chart (D1).
Bollinger Bands
In the case of a decline, the lower boundary of the indicator around 1.0568 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 that use the futures market for speculative purposes and meet 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 1.0586 and recommended making trading decisions based on it. 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 1.0586 led to a signal to sell the euro. However, as of the time of writing this article, there has been no significant downward movement. In the second half of the day, the technical picture was completely reassessed.
To open long positions on EUR/USD, the following is required:
During the American session, there are no fundamental data releases, so all attention will be focused on the speeches of FOMC member Patrick T. Harker and FOMC member Loretta Mester. It’s unlikely that we will hear anything new from them that they haven’t already mentioned this week, especially after Federal Reserve Chairman Jerome Powell made it clear yesterday that no one intends to raise rates just like that. For this reason, the rise of the euro may continue. However, in the current conditions, it’s preferable to act after a decline and the formation of a false breakout at the level of 1.0568, which was formed at the end of the first half of the day. Moving averages pass through that level, which would provide a signal for entering long positions with the target of updating the resistance at 1.0612, which the euro bumped into just yesterday. Only a breakthrough and a top-down test of this range against the backdrop of soft statements from Federal Reserve representatives will strengthen the demand for EUR/USD, offering a chance for further correction and a push towards 1.0638. The ultimate target will be the area of 1.0671, where I would take a profit. In the event of a EUR/USD decline and a lack of activity around 1.0568 in the second half of the day, the bears may pull the pair into a sideways channel. In this case, only the formation of a false breakout around 1.0531 would signal a euro buy. I would open long positions only on a rebound from 1.0497 with the target of an upward correction within the day of 30-35 points.
To open short positions on EUR/USD, the following is required:
Sellers have not yet shown themselves, and active purchases around 1.0586 have not been recorded. For this reason, I removed this level from the chart. Currently, it is best for bears to focus on defense and the formation of a false breakout around 1.0612, from where you can get a sell signal with a downward movement towards the new support at 1.0568. We can only talk about market control after a breakthrough and consolidation below this range, as well as a bottom-up retest, which would lead to a sell signal with a target of 1.0531. The ultimate target will be the minimum of 1.0497, where I would take a profit. In the event of an upward movement of EUR/USD during the American session, given the soft statements by the Federal Reserve Chairman and the absence of bears at 1.0612, the bullish market may continue. In this scenario, I would delay short positions until the resistance at 1.0638, which represents this month’s high. You can sell there, but only after an unsuccessful breakout. I would open short positions immediately on a rebound from 1.0671 with a target of a downward correction of 30-35 points.
In the Commitment of Traders (COT) report for October 10, both long and short positions decreased. Given the recent U.S. data releases and the high inflation in September, many traders and economists have doubts about whether the Federal Reserve will continue to pause or raise borrowing costs during the November meeting. Considering the ongoing conflict between Israel and Hamas, as well as a series of negative consequences for the global economy, the demand for risky assets has sharply declined, which is an additional negative factor for the European currency. The European Central Bank’s tough stance is another problem for the euro as the Eurozone’s economy continues to contract. The only positive aspect is the significantly cheaper euro, which continues to attract traders’ attention. The COT report indicates 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 and reached 1.0630, compared to 1.0509, confirming a small upward correction in the euro.
Indicator Signals:
Moving Averages
Trading is taking place just above the 30 and 50-day moving averages, indicating the potential for further growth of the euro.
Note: The author considers the period and prices of the moving averages on the hourly chart (H1), which differs from the general definition of classical daily moving averages on the daily chart (D1).
Bollinger Bands
In the case of a decline, the lower boundary of the indicator around 1.0568 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 that use the futures market for speculative purposes and meet 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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