EUR/USD: trading plan for the US session on October 5th (analysis of morning deals). The euro continues to be bought
October 5, 2023 3:22 pm
In my morning forecast, I highlighted the level of 1.0504 and recommended making entry decisions based on it. Let’s examine the 5-minute chart and analyze what happened there. The drop and the formation of a false breakout at this level signaled a buy opportunity for the euro, resulting in an upward movement of only 20 points so far, which is two-thirds of the daily volatility. The technical picture remained unchanged for the second half of the day.
To open long positions on EUR/USD, you should consider the following:
Given the low market volatility, the second half of the day should be more interesting. We expect data on initial jobless claims and the US trade balance, as well as speeches by FOMC members Loretta Mester and Mary Daly. I will continue to act according to the morning scenario, expecting further upward corrections. However, if the US data does not disappoint, especially jobless claims, pressure on the euro may return. In that case, I will consider entry around the support level of 1.0504, which has already been tested once today. Another false breakout there could provide a good entry point for long positions, with the target of further upward correction towards the resistance at 1.0532. Breaking and testing this range from top to bottom, amid dovish statements from Federal Reserve representatives, would offer an opportunity to reach 1.0560. The ultimate target will be the area around 1.0588, where I will make a profit. In the event of a decline in EUR/USD and no activity at 1.0504 in the second half of the day, especially as the moving averages are in favor of buyers, pressure on the euro may return. In that case, only a false breakout formation around 1.0478 will signal an entry into the market. I will consider opening long positions on a rebound from 1.0450 with the goal of an intraday upward correction of 30-35 points.
To open short positions on EUR/USD, you should consider the following:
For sellers, not much has changed. They attempted to break below 1.0504 but failed. This does not alter the overall picture and does not cancel out the bearish trend observed for the euro recently. Protecting the nearest resistance at 1.0532 remains the main task for sellers, and a false breakout formation there would signal a euro sell-off with a subsequent move down to the minimum of 1.0504. Only after breaking and holding below this range, against the backdrop of tough statements from Fed representatives and a retest from bottom to top, do I expect to receive another sell signal with an exit to a new minimum of 1.0478, where I anticipate the emergence of larger buyers. The ultimate target will be the area around 1.0450, where I will take a profit. In the event of an upward movement of EUR/USD during the American session and no bears at 1.0532, buyers will have a chance for further upward corrections. In such a scenario, I will postpone short positions until the resistance at 1.0560. It may be possible to sell there, but only after a failed breakthrough and holding below that level. I will consider opening short positions immediately on a rebound from the maximum of 1.0581.0588, the target of a 30-35 point downward correction.
In the Commitment of Traders (COT) report as of September 26th, both long and short positions increased. However, short positions were nearly twice as numerous. Negative developments in the Eurozone economy, as well as the risk of further interest rate hikes by the ECB, have contributed to the ongoing bearish market for the euro. Statements by ECB President Christine Lagarde, not her representatives, also had a hawkish tone. Even news that inflation in the Eurozone slowed down in August did not help the euro withstand pressure from major sellers. The growth in long positions, however, shows that the pair appears more appealing for medium-term buying the lower it goes. The COT report indicates that long non-commercial positions increased by 4,092 to the level of 211,516, while short non-commercial positions increased by 7,674 to 113,117. As a result, the spread between long and short positions increased by 1,216. The closing price dropped to 1.0604 from 1.0719, indicating a bearish market.
Indicator signals:
Moving averages
Trading is conducted above the 30 and 50-day moving averages, indicating an attempt by the bulls to establish an upward correction for the pair.
Note: The author considers the period and prices of the moving averages on the H1 hourly chart, which differs from the general definition of classical daily moving averages on the D1 daily chart.
Bollinger Bands
In the case of a decline, the lower boundary of the indicator around 1.0495 will act as support.
Description of indicators:
• Moving average (determines the current trend by smoothing volatility and noise). Period 50. Marked on the chart in yellow.
• Moving average (determines the current trend by smoothing volatility and noise). Period 30. Marked on the chart in green.
• 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 certain 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 highlighted the level of 1.0504 and recommended making entry decisions based on it. Let’s examine the 5-minute chart and analyze what happened there. The drop and the formation of a false breakout at this level signaled a buy opportunity for the euro, resulting in an upward movement of only 20 points so far, which is two-thirds of the daily volatility. The technical picture remained unchanged for the second half of the day.
To open long positions on EUR/USD, you should consider the following:
Given the low market volatility, the second half of the day should be more interesting. We expect data on initial jobless claims and the US trade balance, as well as speeches by FOMC members Loretta Mester and Mary Daly. I will continue to act according to the morning scenario, expecting further upward corrections. However, if the US data does not disappoint, especially jobless claims, pressure on the euro may return. In that case, I will consider entry around the support level of 1.0504, which has already been tested once today. Another false breakout there could provide a good entry point for long positions, with the target of further upward correction towards the resistance at 1.0532. Breaking and testing this range from top to bottom, amid dovish statements from Federal Reserve representatives, would offer an opportunity to reach 1.0560. The ultimate target will be the area around 1.0588, where I will make a profit. In the event of a decline in EUR/USD and no activity at 1.0504 in the second half of the day, especially as the moving averages are in favor of buyers, pressure on the euro may return. In that case, only a false breakout formation around 1.0478 will signal an entry into the market. I will consider opening long positions on a rebound from 1.0450 with the goal of an intraday upward correction of 30-35 points.
To open short positions on EUR/USD, you should consider the following:
For sellers, not much has changed. They attempted to break below 1.0504 but failed. This does not alter the overall picture and does not cancel out the bearish trend observed for the euro recently. Protecting the nearest resistance at 1.0532 remains the main task for sellers, and a false breakout formation there would signal a euro sell-off with a subsequent move down to the minimum of 1.0504. Only after breaking and holding below this range, against the backdrop of tough statements from Fed representatives and a retest from bottom to top, do I expect to receive another sell signal with an exit to a new minimum of 1.0478, where I anticipate the emergence of larger buyers. The ultimate target will be the area around 1.0450, where I will take a profit. In the event of an upward movement of EUR/USD during the American session and no bears at 1.0532, buyers will have a chance for further upward corrections. In such a scenario, I will postpone short positions until the resistance at 1.0560. It may be possible to sell there, but only after a failed breakthrough and holding below that level. I will consider opening short positions immediately on a rebound from the maximum of 1.0581.0588, the target of a 30-35 point downward correction.
In the Commitment of Traders (COT) report as of September 26th, both long and short positions increased. However, short positions were nearly twice as numerous. Negative developments in the Eurozone economy, as well as the risk of further interest rate hikes by the ECB, have contributed to the ongoing bearish market for the euro. Statements by ECB President Christine Lagarde, not her representatives, also had a hawkish tone. Even news that inflation in the Eurozone slowed down in August did not help the euro withstand pressure from major sellers. The growth in long positions, however, shows that the pair appears more appealing for medium-term buying the lower it goes. The COT report indicates that long non-commercial positions increased by 4,092 to the level of 211,516, while short non-commercial positions increased by 7,674 to 113,117. As a result, the spread between long and short positions increased by 1,216. The closing price dropped to 1.0604 from 1.0719, indicating a bearish market.
Indicator signals:
Moving averages
Trading is conducted above the 30 and 50-day moving averages, indicating an attempt by the bulls to establish an upward correction for the pair.
Note: The author considers the period and prices of the moving averages on the H1 hourly chart, which differs from the general definition of classical daily moving averages on the D1 daily chart.
Bollinger Bands
In the case of a decline, the lower boundary of the indicator around 1.0495 will act as support.
Description of indicators:
• Moving average (determines the current trend by smoothing volatility and noise). Period 50. Marked on the chart in yellow.
• Moving average (determines the current trend by smoothing volatility and noise). Period 30. Marked on the chart in green.
• 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 certain 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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