Relevance up to 07:00 2021-10-19 UTC–4
To open long positions on EURUSD, you need:
In my morning forecast, I paid attention to the 1.1593 level and recommended making decisions from it. Let’s look at the 5-minute chart and figure out what happened. It is seen how the formation of a false breakdown and an unsuccessful attempt to break through the 1.1593 level leads to the formation of a sell signal for the euro, after which the pair falls by about 20 points. Given the low volatility of the pair in the first half of the day, this movement was 2/3 of it. From a technical point of view, nothing has changed, and buyers and sellers will be focused on the previous levels.
In the afternoon, several data on the American economy are released, and attention should be paid to the report on changes in industrial production and the monthly report on the execution of the US budget. If the indicators do not surprise traders, the pair will likely trade in a narrow side channel. However, buyers need to return the resistance of 1.1593 today. Only a breakout and consolidation above this range, as well as its reverse test from top to bottom, will form a signal to buy the euro, preserve the upward potential of the pair and allow us to count on a recovery to the maximum of 1.1618. A breakdown of this range with a similar top-down test will allow the bulls to continue the upward trend with the prospect of strengthening EUR/USD to the area of 1.1637, where I recommend fixing the profits. A longer-range target will be a maximum of 1.1656. If the bulls fail again in the area of 1.1593, then an equally important task will be to protect the support of 1.1567, which we did not reach quite a bit during the European session. The formation of a false breakdown there will form a good entry point into long positions and lead to the formation of the lower boundary of the ascending channel formed on October 12. In the absence of bull activity at this level, I advise you to postpone purchases to the area of 1.1542, or even lower – from the minimum of 1.1510, counting immediately on a rebound of 15-20 points.
To open short positions on EURUSD, you need:
The second half of the day may be dictated by euro sellers. However, a lot will depend on US reports. Bears need to defend the resistance of 1.1593 because the market will remain under their control until that moment. At the level of 1.1593, there are moving averages playing on the sellers’ side, and only the next formation of a false breakdown will return real pressure on the pair, which will push it to the support of 1.1567. A breakout and a test of this level from the bottom up will lead to the formation of a signal to open new short positions, which will quickly push EUR/USD to 1.1542. A longer-range target will be a minimum of 1.1510, but its test will mean the resumption of the bear market for the euro. Under the scenario of no sellers at the level of 1.1593 and a successful second breakout attempt against the background of weak data on industrial production in the United States, it is best to postpone sales until the next major resistance of 1.1618, which was formed at the end of last week. But even there, I advise you to sell euros only when a false breakdown is formed. It is possible to open short positions immediately for a rebound based on a downward correction of 15-20 points from a new maximum of 1.1637.
The COT report (Commitment of Traders) for October 5 recorded a sharp increase in short and only a slight increase in long positions, which reduced the net position. A large increase in short positions only confirms the formation of a bear market for the European currency. Political problems in the United States of America, some of which have already been solved at the moment, also affected the current positions of the players in the COT report under consideration. Friday’s report from the US Department of Commerce on the labor market (it is not taken into account in this COT report) will not affect the balance of power of buyers and sellers in any way since the data turned out to be quite ambiguous. All this only confirms the continuation of the bullish trend in the US dollar, which will be observed this week. The prospect of changes in the monetary policy of the Federal Reserve System allows traders to build up long positions on the dollar without much difficulty, as many investors expect the Central Bank to begin reducing the bond purchase program closer to the end of this year. Demand for risky assets will remain limited due to the wait-and-see position of the European Central Bank. Last week, the ECB president said that she would continue to adhere to a wait-and-see position and maintain a stimulating policy at current levels. The COT report indicates that long non-commercial positions increased from the level of 195,043 to the level of 196,819, while short non-commercial positions jumped quite seriously – from the level of 194,171 to the level of 219,153. At the end of the week, the total non-commercial net position entered the negative zone and dropped from 872 to the level of -22334. The weekly closing price also fell to 1.1616 from 1.1695.
Signals of indicators:
Trading is conducted below 30 and 50 daily moving averages, which indicates an attempt by bears to pull the market to their side.
Note: The author considers the period and prices of moving averages on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
In case of a decline in the euro, the lower limit of the indicator (around 1.1575) will provide support. In the case of growth, the upper limit of the indicator in the area of 1.1618 will act as resistance.
Description of indicators
Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.MACD indicator (Moving Average Convergence / Divergence – moving average convergence/divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9Bollinger Bands (Bollinger Bands). Period 20Non-profit speculative traders, 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 position of non-commercial traders.Short non-commercial positions represent the total short open position of non-commercial traders.Total non-commercial net position is the difference between the short and long positions of non-commercial traders.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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