FX.co ★ EUR/USD: the plan for the American session on October 5 (analysis of morning deals). The euro failed to catch on to parity

In my morning forecast, I paid attention to the 0.9996 level and the 0.9952 level and recommended making decisions on entering the market there. Let's look at the 5-minute chart and figure out what happened there. The growth of the euro took place at the very beginning of the European session, and a false breakdown in the area of 0.9996 gave a sell signal, which brought about 40 points of profit. But even if you failed to enter the market from 0.9996, the subsequent breakdown and reverse test of 0.9952 led to another sell signal, which resulted in another drop in the euro by more than 40 points. In the afternoon, the technical picture changed slightly.

To open long positions on EURUSD, you need:

Weak statistics on activity in the eurozone led to a fairly significant correction of the euro in the first half of the day, which in principle, was expected. During the American session, similar statistics for the United States are released. We will learn about the state of the ISM business activity index in the services sector in the United States, as well as get acquainted with data on changes in the number of employees from ADP and the balance of foreign trade in the United States, which may further strengthen the position of the US dollar. With very good indicators and a decline in EUR/USD, I advise you to pay attention to the nearest support of 0.9889. The formation of a false breakdown there forms a rather interesting signal to buy the euro with the aim of an upward correction to the area of 0.9941, where the moving averages are already playing on the sellers' side. Consolidation above this range and a top-down test will cancel out all the morning efforts of the bears to control the market, which will lead to a buy signal and recovery already in the 0.9990 area, where it will remain very close to the parity update. The farthest target will be the 1.0040 area, where I recommend fixing the profits. If EUR/USD declines after strong statistics on the US labor market and a breakout of 0.9889, the pair will continue its decline and quickly slide down to the next support of 0.9849. I also recommend buying only on a false breakdown. I advise you to open long positions on EUR/USD immediately for a rebound only from the minimum of 0.9807 or even lower – around 0.9761 – with the aim of an upward correction of 30–35 points within a day.

To open short positions on EURUSD, you need:

Sellers are aiming at 0.9889, and it seems that a test at this level cannot be avoided. But a much more important task for the second half of the day will be to protect the nearest resistance of 0.9941, formed by the results of the first half of the day. Weak economic data in the US will certainly increase the appetite for risk and lead to an update of this range. Only a false breakdown there forms a sell signal to reduce to 0.9889, where the moving averages also pass. Trading within the averages indicates market uncertainty with the pair's further direction, so I would not expect much further decline. It is better to sell on a correction. A breakdown and consolidation below 0.9889 will put pressure on the euro. A reverse test from the bottom up will form an additional sell signal with demolishing buyers' stop orders and the prospect of updating the 0.9849 minimum. A more distant goal will be the support of 0.9807, where I recommend fixing the profits. In the event of an upward movement of EUR/USD during the US session, as well as the absence of bears at 0.9941, which is more likely, buyers will gain an advantage, which will lead to a correction of the euro to the maximum of 0.9990. I would also advise you to sell only on a false breakdown. It is possible to open short positions immediately for a rebound only from 1.0040 or even higher – from 1.0080 with the aim of a downward correction of 30–35 points.

The COT report (Commitment of Traders) for September 27 recorded an increase in both short and long positions. The central bank meetings have been held, and given that the euro has withstood the pressure generated by the statements of European and American politicians last week, we can count on a gradual recovery of the pair in the short term. However, you should not delude yourself too much. As is already known, inflation in the EU countries has already exceeded 10.0%, and in the autumn-winter period, the situation with this indicator will only worsen. For this reason, I would not bet on strong euro growth. The deterioration of the geopolitical situation in the world, which mostly concerns the eurozone, will greatly slow down the European economy in the near future and will certainly lead it to recession in the spring of next year. In the near future, it is expected that important data on activity in the eurozone countries will be released, the decline of which may significantly limit the further upward potential of the pair. The COT report indicated that long non-profit positions rose by 2,172 to 208,736, while short non-profit positions jumped by 1,824 to 174,939. At the end of the week, the total non-commercial net position remained positive and amounted to 33,797 against 33,449. This indicates that investors are taking advantage of the moment and continuing to buy the cheap euro below parity, as well as accumulate long positions to end the crisis and restore the pair in the long term. The weekly closing price collapsed and amounted to 0.9657 against 1.0035.

Signals of indicators:

Moving Averages

Trading is conducted around the 30 and 50-day moving averages, which indicates market uncertainty.

Note: The author considers the period and prices of moving averages on the hourly chart H1 and differs from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger Bands

In the case of growth, the upper limit of the indicator at around 1.0010 will act as resistance.

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 use the futures market for speculative purposes and to 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.