UR/USD: trading plan for the US session on October 17th (analysis of morning deals). Statistics helped the euro hold its
October 17, 2023 12:25 pm
In my morning forecast, I drew attention to the level of 1.0538 and recommended making trading decisions based on it. Let’s take a look at the 5-minute chart and analyze what happened there. The decline and the formation of a false breakout at 1.0538 led to an excellent entry point for long positions, resulting in an upward movement of over 25 points. The technical picture hasn’t changed for the second half of the day.
To open long positions on EUR/USD:
Thanks to the positive reports from ZEW on the Eurozone and Germany, European currency buyers managed to stay above 1.0538 and even attempted to break the resistance at 1.0562, which they are currently struggling with. However, we have very important reports on changes in retail trade and industrial production volume in the US ahead, which could lead to a significant increase in volatility and renewed pressure on the pair, especially if the data exceeds economists’ forecasts. Speeches by FOMC members John Williams and Michelle Bowman should not be discounted either. In the event of a decline in the pair, I would prefer to act after a false breakout is formed near the morning support at 1.0538. This will provide another signal for entering long positions with the target of retesting the resistance at 1.0562 from above. A breakthrough and top-down testing of this range against the backdrop of weak US statistics will boost demand for the euro, providing a chance for further corrections and a jump to 1.0586. The ultimate target will be the 1.0608 area, where I will make profits. In the case of a decline in EUR/USD and the absence of activity at 1.0538 in the second half of the day, which is likely, the bears may not regain control of the market, but trading may remain within a sideways range. In this case, only a false breakout formation around 1.0517 would signal a euro buy. I will open long positions after a rebound from 1.0497 with a target of a 30-35 point upward correction within the day.
To open short positions on EUR/USD:
Sellers have already shown themselves at the 1.0562 level, and while trading remains below this range, pressure on the euro can return at any moment. One more false breakout formation there after strong US data will signal a euro sell-off with a downward movement to 1.0538. A breakthrough and consolidation below this range, as well as a bottom-up retest, will lead to another sell-off signal with an exit to the minimum of 1.0517. The ultimate target will be the 1.0497 area, where I will take profits. In the event of an upward movement of EUR/USD during the American session and the absence of bears at 1.0562, buyers will regain control of the market and attempt to build a new upward correction. In such a scenario, I will postpone short positions until the 1.0586 resistance. You can sell there, but only after an unsuccessful consolidation. I will open short positions immediately on the rebound from 1.0608 with a target of a 30-35 point downward correction.
In the COT report (Commitment of Traders) for October 10, there was a reduction in both long and short positions. Given the recent US data and the high inflation in September, many traders and economists have doubts about whether the Federal Reserve will continue to take a pause or raise borrowing costs further at the November meeting. Considering the conflict between Israel and Hamas and the negative consequences for the global economy, the demand for risky assets has also sharply decreased, which is an additional negative for the European currency. The tough stance of the European Central Bank is another problem for the euro, as the Eurozone’s economy continues to contract. The only positive point is the significantly lower euro, which continues to attract traders’ attention. The COT report indicates that non-commercial long positions decreased by 4,261 to 207,522, while non-commercial short positions decreased only by 850 to 131,990. As a result, the spread between long and short positions has decreased by 5,519. The closing price increased and reached 1.0630 against 1.0509, confirming a small upward correction of the euro.
Indicator Signals:
Moving averages
Trading is taking place around the 30 and 50-day moving averages, indicating a sideways market.
Note: The author examines the period and prices of moving averages on the hourly chart (H1), which differs from the general definition of classic daily moving averages on the daily chart (D1).
Bollinger Bands
In case of a decline, the lower boundary of the indicator around 1.0538 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 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 net non-commercial 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 1.0538 and recommended making trading decisions based on it. Let’s take a look at the 5-minute chart and analyze what happened there. The decline and the formation of a false breakout at 1.0538 led to an excellent entry point for long positions, resulting in an upward movement of over 25 points. The technical picture hasn’t changed for the second half of the day.
To open long positions on EUR/USD:
Thanks to the positive reports from ZEW on the Eurozone and Germany, European currency buyers managed to stay above 1.0538 and even attempted to break the resistance at 1.0562, which they are currently struggling with. However, we have very important reports on changes in retail trade and industrial production volume in the US ahead, which could lead to a significant increase in volatility and renewed pressure on the pair, especially if the data exceeds economists’ forecasts. Speeches by FOMC members John Williams and Michelle Bowman should not be discounted either. In the event of a decline in the pair, I would prefer to act after a false breakout is formed near the morning support at 1.0538. This will provide another signal for entering long positions with the target of retesting the resistance at 1.0562 from above. A breakthrough and top-down testing of this range against the backdrop of weak US statistics will boost demand for the euro, providing a chance for further corrections and a jump to 1.0586. The ultimate target will be the 1.0608 area, where I will make profits. In the case of a decline in EUR/USD and the absence of activity at 1.0538 in the second half of the day, which is likely, the bears may not regain control of the market, but trading may remain within a sideways range. In this case, only a false breakout formation around 1.0517 would signal a euro buy. I will open long positions after a rebound from 1.0497 with a target of a 30-35 point upward correction within the day.
To open short positions on EUR/USD:
Sellers have already shown themselves at the 1.0562 level, and while trading remains below this range, pressure on the euro can return at any moment. One more false breakout formation there after strong US data will signal a euro sell-off with a downward movement to 1.0538. A breakthrough and consolidation below this range, as well as a bottom-up retest, will lead to another sell-off signal with an exit to the minimum of 1.0517. The ultimate target will be the 1.0497 area, where I will take profits. In the event of an upward movement of EUR/USD during the American session and the absence of bears at 1.0562, buyers will regain control of the market and attempt to build a new upward correction. In such a scenario, I will postpone short positions until the 1.0586 resistance. You can sell there, but only after an unsuccessful consolidation. I will open short positions immediately on the rebound from 1.0608 with a target of a 30-35 point downward correction.
In the COT report (Commitment of Traders) for October 10, there was a reduction in both long and short positions. Given the recent US data and the high inflation in September, many traders and economists have doubts about whether the Federal Reserve will continue to take a pause or raise borrowing costs further at the November meeting. Considering the conflict between Israel and Hamas and the negative consequences for the global economy, the demand for risky assets has also sharply decreased, which is an additional negative for the European currency. The tough stance of the European Central Bank is another problem for the euro, as the Eurozone’s economy continues to contract. The only positive point is the significantly lower euro, which continues to attract traders’ attention. The COT report indicates that non-commercial long positions decreased by 4,261 to 207,522, while non-commercial short positions decreased only by 850 to 131,990. As a result, the spread between long and short positions has decreased by 5,519. The closing price increased and reached 1.0630 against 1.0509, confirming a small upward correction of the euro.
Indicator Signals:
Moving averages
Trading is taking place around the 30 and 50-day moving averages, indicating a sideways market.
Note: The author examines the period and prices of moving averages on the hourly chart (H1), which differs from the general definition of classic daily moving averages on the daily chart (D1).
Bollinger Bands
In case of a decline, the lower boundary of the indicator around 1.0538 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 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 net non-commercial 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
Related Posts: