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EUR/USD: plan for the American session on October 28 (analysis of morning deals). The euro continues to trade in the channel

Relevance up to 07:00 2021-10-29 UTC–4

To open long positions on EURUSD, you need:

In the first half of the day, trading was conducted mainly in the side channel. The unsuccessful attempt of the bears to push through the level of 1.1591 did not allow them to enter the market in short positions. There was also no buy signal formed. The focus of traders will shift to the afternoon and the publication of the decision of the European Central Bank on monetary policy. From a technical point of view, apart from the nearest support and resistance levels, nothing much has changed. The strategy also remained the same, as much will depend not only on the ECB’s decisions but also on the publication of US GDP data for the 3rd quarter of this year.

Considering that in the first half of the day the bulls defended the lower border of the side channel thanks to good fundamental statistics on the German labor market, the focus is now shifted to the upper border of the channel in the area of 1.1622. As noted above, this is what the president of the European Central Bank, Christine Lagarde, will tell us and determine the further direction of the pair. If there are hints of policy tightening in an earlier period, the bulls will focus on breaking through the resistance of 1.1622, which has been preventing euro buyers from resuming the upward trend for several days. Only a breakdown and a test of this level from top to bottom will form an excellent entry point into long positions, which will open the way to 1.1649 and 1.1668, where I recommend fixing the profits. The 1.1691 level will be a more distant target, but it will be available on the condition that the ECB seriously talks about inflation risks. If Christine Lagarde continues to adhere to an ultra-soft monetary policy, it is unlikely to harm the euro much, but it may create additional intraday pressure on the pair. In the event of a decline in EUR/USD in the afternoon, an equally important task for the bulls will be to protect the lower border of the 1.1586 channel. The formation of a false breakout there 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 remains to protect the resistance of 1.1622. Only the next formation of a false breakdown there, together with strong data on US GDP for the 3rd quarter of this year, the growth of which should exceed economists’ forecasts, as well as data on reducing the number of initial applications for unemployment benefits in the US – this will lead to the formation of a good entry point into short positions, which will push the pair back to the lower limit of 1.1586. As noted above, it was not possible to gain a foothold under this level in the first half of the day. A breakout and a test of 1.1586 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 1.1559. A breakdown of this range will also demolish several buyers’ stop orders, which will quickly collapse the euro by 1.1537 and open access to 1.1510, where I recommend fixing the profits. In the scenario of the pair’s growth in the afternoon and the absence of sellers at the level of 1.1622, it is best to postpone sales until the test of the next level of 1.1649. It is possible to open short positions immediately for a rebound based on a downward correction of 15-20 points from the weekly maximum of 1.1668.

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:

Moving averages

Trading is conducted around 30 and 50 daily moving averages, which indicates the lateral nature of the market before important fundamental data.

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.

Bollinger Bands

A breakthrough of the upper limit of the indicator in the area of 1.1615 will lead to a new wave of euro growth. In case of a decline, the lower limit of the indicator in the area of 1.1590 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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