EUR/USD: plan for the American session on October 26 (analysis of morning deals)
To open long positions on EURUSD, you need:
In my morning forecast, I drew attention to the report on the economic expectations indicator from the IFO, which turned out to be worse than economists’ forecasts, which returned pressure on the euro. Let’s look at the 5-minute chart and talk about where you could enter the market. The formation of a false breakout in the first half of the day at the level of 1.1826 formed a good signal to buy the euro, however, the reports were worse than economists’ forecasts, and the euro did not move up. Even after the bears took the level of 1.1826, a convenient entry point was not immediately formed. However, the pair have already returned to this range and tested it, which keeps the market on the side of euro sellers.
The primary task of buyers for the second half of the day is to regain control over the resistance of 1.1826. Fixing at this level and testing it from top to bottom forms a good signal to open long positions in the expectation of continuing the upward trend observed over the past week. The goal of the bulls in this scenario will be to return to the maximum of 1.1864, where I recommend fixing the profit. But even if the euro’s decline continues, it is too early to panic, as the pair may remain in the side channel with the lower limit of 1.1792. However, I recommend opening long positions from this area only if a false breakout is formed. You can buy EUR/USD immediately for a rebound only from the minimum of 1.1762, based on 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 regained control over the support of 1.1826, which now acts as a resistance. The bottom-up test of this level has already formed a good entry point for short positions. I marked it on the 5-minute chart. As long as trading is conducted below this range, you can expect a further decline in the euro, as the bullish momentum continues its gradual completion. The immediate goal is to return EUR/USD to the support of 1.1792, where I recommend fixing the profits. The longer-term target will be at least 1.1762. In the scenario of EUR/USD growth above 1.1826 and lack of activity among sellers at this level, it is best not to rush to open short positions, but to wait for the update of the maximum of 1.1864 and sell the euro for a rebound for a correction of 15-20 points.
Let me remind you that the COT report (Commitment of Traders) for October 20 recorded both the growth of long positions and the growth of short ones. However, the latter turned out to be more, which led to an even greater decrease in the positive 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-profit positions rose from the level of 228,295 to the level of 229,878, while short non-profit positions rose from the level of 59,658 to the level of 63,935. The total non-commercial net position fell to 165,943, down from 168,637 a week earlier. However, bullish sentiment on the euro remains quite high in the medium term. 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 below 30 and 50 daily moving averages, which indicates the formation of a downward correction in the market.
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.
If the pair grows, the average border of the indicator around 1.1840 will act as a resistance, and you can sell the euro immediately on a rebound from the upper border of the indicator in the area of 1.1870.
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