EUR/USD: plan for the American session on October 21 (analysis of morning deals)
To open long positions on EURUSD, you need to:
The lack of important fundamental statistics today helps the European currency to continue its growth against the US dollar. Although we didn’t manage to wait for a good entry point into long positions, those who read my morning forecast probably expected a test of the 1.1868 level and acted on it. If you look at the 5-minute chart, you will see how the bulls are unsuccessfully trying to break above the resistance of 1.1868, which forms a false breakout and leads to a downward movement of the euro. However, it is worth noting that there was no major downward movement, and the movement was only corrective in nature.
In the second half of the day, a lot will depend on the resistance of 1.1868, since now this level is the key target for buyers of the European currency. A breakdown and consolidation above this range will lead to a new upward wave of euro growth in the area of the maximum of 1.1915, where I recommend fixing the profits. It will be quite difficult to break above the 19th figure without positive fundamental indicators for the European economy. A more optimal scenario for buying the European currency would be the formation of a false breakout in the support area of 1.1836, just below which the moving averages play on the buyers’ side. Given the fact that no important reports are scheduled for the second half of the day, the market may remain in the hands of euro buyers. If there is no bull activity at the level of 1.1836, it is best to wait for the update of the larger minimum of 1.1802 and open long positions from there immediately for a rebound in the expectation of a correction of 15-20 points within the day.
To open short positions on EURUSD, you need to:
Sellers coped with the morning task and defended the resistance of 1.1868. While trading will be conducted below this range, you can expect a further decline in the euro, as the bullish momentum is gradually coming to an end. Another false breakout at the level of 1.1868 will be a signal to open short positions in order to return EUR/USD to the support of 1.1836, consolidation under which will lead to a quick sale of the pair to the support area of 1.1802. A longer-term goal will be at least 1.1765, where I recommend fixing the profits. In the EUR/USD growth scenario above 1.1868 in the second half of the day, it is best not to rush to open short positions, but wait for the update of the maximum of 1.1915 and sell the euro there for a rebound for a correction of 15-20 points.
Let me remind you that the COT report (Commitment of Traders) for October 13 recorded a reduction in long positions and an increase in short ones, which led to an even greater decrease in the delta. But despite this, buyers of risky assets believe in the continuation of the bull market, but prefer to proceed cautiously, as there is no good news on the Eurozone yet. Thus, long non-commercial positions declined from a level of 369,231 to 228,295, while non-commercial short positions increased with the level 57,061 to level 59,658. The total non-commercial net position fell to 168,637, compared to 174,308 a week earlier, which indicates a wait-and-see attitude of new players. However, bullish sentiment for the euro in the medium term remains quite high. The stronger the euro declines against the US dollar at the end of this year, the more attractive it will be for new investors.
Signals of indicators:
Trading is conducted above 30 and 50 daily moving averages, which indicates an active attempt by euro buyers to continue growth.
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 classic daily moving averages on the daily chart D1.
If the pair declines, the lower border of the indicator in the area of 1.1810 will provide support. Breaking the upper limit of the indicator around 1.1868 will lead to a new wave of euro growth.
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 9
- Bollinger Bands (Bollinger Bands). Period 20
- Non-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 material has been provided by InstaForex Company – www.instaforex.com