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EUR/USD: plan for the American session on October 20 (analysis of morning deals). The inflation data reassured traders.

Relevance up to 07:00 2021-10-21 UTC–4

To open long positions on EURUSD, you need:

In my morning forecast, I paid attention to the 1.1632 level and advised them to make decisions. Let’s look at the 5-minute chart and analyze the entry points. The Asian growth of the euro quickly ended, and the pressure on the pair returned at the very beginning of the European session. The breakout and reverse test of the 1.1632 level formed an entry point into short positions, after which the pair fell into the 1.1620 area, where the pressure slowed down a lot. The expected increase in inflation in the eurozone following forecasts did not help buyers continue their upward trend. By the afternoon, the picture had changed entirely.

The entire focus of buyers is now shifted to protecting the support of 1.1618, which was formed at the end of the first half of the day. The fact that important fundamental statistics on the United States are not released during the American session may help euro buyers partially compensate for their losses. But we should not forget about several interviews with the Federal Reserve System representatives – yesterday’s speeches by politicians allowed the US dollar to strengthen its position against the euro seriously. Now only the formation of a false breakdown in the area of 1.1618 forms a new signal to open long positions to restore the euro to the resistance area of 1.1645, which was also formed at the end of the day. A breakdown of this level with consolidation above and a reverse test from top to bottom – all this will form a signal to buy euros with the prospect of returning to the weekly maximum in the area of 1.1668, where I recommend fixing the profits. The regions 1.1691 and 1.1713 will be a more distant target. If the bears become stronger during the American session, and the bulls do not offer anything around 1.1618, it is best to be patient and postpone purchases to larger support of 1.1593. It is possible to open long positions immediately for a rebound only from the minimum of 1.1573 based on an upward correction of 15-20 points within a day.

To open short positions on EURUSD, you need:

The second half of the day may also be dictated by the euro sellers, but this requires hawkish statements by representatives of the Federal Reserve System about inflation and monetary policy. The initial task of the bears will be to protect the resistance of 1.1645, to which the pair is now gradually recovering. Only an unsuccessful consolidation above this range forms a sell signal to reduce today’s minimum – 1.1618. There will be a more serious struggle for further control of the market. Only a breakout and a test of 1.1618 forms an additional signal to open short positions, which will push EUR/USD to 1.1593 and 1.1573, where I recommend fixing the profits. In the scenario of the pair’s growth and lack of activity in the area of 1.1645, I recommend opening short positions immediately for a rebound from the weekly maximum of 1.1668 and then only counting on a downward correction of 15-20 points.

The COT report (Commitment of Traders) for October 12 recorded an increase in short and long positions. However, the former turned out to be more, which slightly reduced the negative delta. Political problems in the United States of America have been resolved. The latest fundamental reports do not cease to please traders, which indicates that the US economy continues to recover at a good pace. The fact that the Federal Reserve is already seriously considering curtailing the bond purchase program is no longer news that could help dollar buyers at the moment. But the fact that representatives of the European Central Bank began to express concern about the rate of inflation growth, even if not in the same form as colleagues from the Fed – all this allows the European currency to begin to win back positions gradually. This trend may continue in the future, especially in the case of strong statistics on the European economy. However, the larger medium-term demand for risky assets will remain limited due to the wait-and-see attitude of the European Central Bank. The COT report indicates that long non-profit positions rose from the level of 196,819 to 202,512, while short non-profit positions jumped from the level of 219,153 to the level of 220,910. At the end of the week, the total non-commercial net position increased slightly and amounted to -18,398 against -22,334. The weekly closing price dropped to 1.1553 against 1.1616.

Signals of indicators:

Moving averages

Trading is conducted around 30 and 50 daily moving averages, which indicates a confrontation between buyers and sellers.

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.

Bollinger Bands

A breakthrough of the lower limit of the indicator in the area of 1.1618 will lead to a major drop in the euro. A breakthrough of the upper limit of the indicator in the area of 1.1650 will lead to instant recovery of the pair.

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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