Relevance up to 07:00 2021-10-28 UTC–4
To open long positions on EURUSD, you need:
In the first half of the day, several signals were formed to enter the market. Let’s take a look at the 5-minute chart and figure out what happened. Updates to the 1.1612 level, which I paid attention to in my forecast, led to the formation of a false breakdown and the formation of a good entry point into short positions. As a result, it was possible to observe a decline in the euro to the support area of 1.1590. At the time of writing the forecast, a good false breakdown was formed there, which gave an excellent entry point already for opening long positions with the prospect of a euro recovery in the afternoon. From a technical point of view, nothing much has changed.
Given that the European session passed without any serious market shocks, and the released fundamental data did not differ much from economists’ forecasts, the entire focus will now shift to the afternoon and reports on the American economy. If the data on the change in the volume of orders for long-term goods in the United States turns out to be worse than economists’ forecasts, the bulls will return to the resistance of 1.1616 again. The further growth of the pair depends on it. Strong data is unlikely to allow euro buyers to get above this resistance. Only its impulse, as well as the reverse test from top to bottom, form a signal to buy the euro, which will allow us to see an upward correction to the resistance area of 1.1630. A similar breakdown and test of this level from top to bottom will form another entry point into long positions, which will open the way to 1.1649 and 1.1668, where I recommend fixing the profits. If the pressure on the pair persists, the same task of the bulls will be to protect the lower border of 1.1588. The next formation of a false breakdown there, by analogy with what I discussed above, forms a good entry point into long positions. If there is no activity of buyers at this level, I advise you to postpone purchases to the 1.1568 area. It is best to buy a pair immediately for a rebound from the minimum of 1.1542 and only count on a correction of 15-20 points within a day.
To open short positions on EURUSD, you need:
The initial task of the euro sellers remained to protect the morning resistance of 1.1616, where a good entry point into short positions was formed. Only the next formation of a false breakdown there, together with strong data on changes in the volume of orders for long-term goods and the balance of US foreign trade – all this will return real pressure on EUR/USD and push the pair to the lower border of 1.1588. It was not possible to gain a foothold under this level in the first half of the day. A breakout and a test of 1.1588 from the bottom up will lead to the formation of a signal to open new short positions, followed by a fall to the area of 1.1568. A breakdown of this range will also lead to the demolition of buyers’ stop orders located below – this will quickly dump EUR/USD to 1.1542 and open access to 1.1510, where I recommend fixing the profits. Under the scenario of the pair’s growth in the afternoon and the absence of sellers at the level of 1.1616, it is best to postpone sales until the test of the maximum of 1.1630, above which the bulls did not break yesterday. It is possible to open short positions immediately for a rebound based on a downward correction of 15-20 points from a large resistance of 1.1649.
The COT report (Commitment of Traders) for 19 recorded a reduction in both short and long positions, which led to a slight recovery of the negative delta, as more sellers left the market than buyers. Last week, inflation in the eurozone came out, which increased and coincided with economists’ expectations. It forced many representatives of the European Central Bank to talk again about changes in monetary policy. However, the fact that almost everyone adhered to a wait-and-see attitude and continued stimulus measures in the form of bond purchases after the completion of the PEPP program in March next year put some pressure on the European currency. The slowdown in activity in the manufacturing and services sectors of the eurozone also did not allow euro buyers to get beyond the 17th figure. However, the key problem in the shorter term, which harms the growth of the euro, is the sharp spread of the fourth wave of coronavirus infection throughout the European Union. As for the United States of America, the good pace of recovery of the American economy continues to support the US dollar. The fact that the Federal Reserve is already seriously considering curtailing the bond purchase program at the next meeting in November will also limit the upward potential of the euro against the US dollar. The COT report indicates that long non-commercial positions decreased from the level of 202,512 to the level of 193,320, while short non-commercial positions dropped from the level of 220,910 to the level of 205,427. At the end of the week, the total non-commercial net position decreased and amounted to -12,107 against -18,398. The weekly closing price rose to the level of 1.1613 against 1.1553.
Signals of indicators:
Trading is conducted around 30 and 50 daily moving averages, which indicates the lateral nature of the market in the first half of the day.
Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
A breakthrough of the upper limit of the indicator in the area of 1.1610 will lead to a new wave of euro growth. In case of a decline, the lower limit of the indicator in the area of 1.1588 will act as support.
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 certain 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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