FX.co ★ EUR/USD: trading plan for the US session on October 10th (analysis of morning deals). Euro continues to recover

In my morning forecast, I pointed out the level of 1.0551 and recommended making entry decisions based on it. Let's take a look at the 5-minute chart and analyze what happened there. The drop towards 1.0551 occurred, but it fell short of testing this area by just a couple of points, so I couldn't find a suitable entry point for long positions there, nor did I see a retest of 1.0583 after the breakout. The technical picture was reassessed for the second half of the day.

To open long positions on EUR/USD, the following is required:

Ahead, we only have the NFIB Small Business Optimism Index and speeches by FOMC representatives, including Raphael Bostic, Christopher Waller, and Neel Kashkari. It's interesting to see if they will support the hypothesis of other FOMC members that the high bond yields resulting from sales could allow the US central bank to refrain from raising interest rates. If they discuss the real need for further borrowing costs, the dollar may regain some of its position against the euro. In the case of a pair's decline, I would prefer to act after a drop and the formation of a false breakout around the new support at 1.0585, formed during the first half of the day. This would provide a good entry point for long positions, targeting the continuation of an upward correction. The target will be a new resistance at 1.0616, which we have not reached yet. A breakthrough and top-down test of this range would give it a chance to surge to 1.0644. The ultimate target will be the area around 1.0671, where I will make a profit. If EUR/USD continues to decline and there is no activity at 1.0585 in the second half of the day, pressure on the euro will increase again, returning trading to a sideways channel. In this case, only the formation of a false breakout around 1.0557, where the moving averages pass, will signal an entry into the market. I would open long positions after a rebound from 1.0522 with the goal of an upward correction of 30-35 points within the day.

To open short positions on EUR/USD, the following is required:

Major sellers are not heavily involved at the moment, and the focus is likely shifting towards protecting the resistance at 1.0616. Only a false breakout formation there during the speeches of FOMC members would signal a sale of the euro with a downward movement towards support at 1.0585. If sellers genuinely want to stop the correction, they need to reclaim this level. After a breakthrough and consolidation below this range, as well as a bottom-up retest, I expect to receive another selling signal with a target of 1.0557, where significant buying occurred today. The ultimate target will be the area around 1.0522, where I would take a profit. If EUR/USD continues to rise during the American session and bears are absent at 1.0616, which is most likely to happen, buyers will have a chance to completely overturn the bear market seen in recent months. In this scenario, I would postpone short positions until the resistance at 1.0644. It's possible to sell there, but only after an unsuccessful breakout. I would open short positions immediately on a rebound from 1.0671 with the target of a downward correction of 30-35 points.

In the Commitment of Traders (COT) report for October 3, there was a minimal increase in long positions and a sharp increase in short positions. Evidently, following the central bank meetings, it became clear that interest rates would continue to rise, which would result in a further strengthening of the US dollar, according to the reports. Moreover, these figures do not yet reflect the changes that occurred after the recent US labor market data, which turned out to be twice as good as economists' forecasts. The situation in the Middle East, where we see ongoing conflicts, does not instill confidence in risk asset buyers, which could increase demand for safe-haven assets, including the US dollar. The COT report indicates that non-commercial long positions increased by only 267 to the level of 211,783, while non-commercial short positions increased by 19,723 to the level of 132,840. As a result, the spread between long and short positions increased by 1,187. The closing price decreased to 1.0509 from 1.0604, indicating a bearish market.

Indicator Signals:

Moving Averages

Trading is conducted above the 30 and 50-day moving averages, indicating the continuation of the upward correction.

Note: The period and prices of the moving averages considered by the author are on the H1 hourly chart and differ from the general definition of classical daily moving averages on the D1 daily chart.

Bollinger Bands

In case of a decline, the lower boundary of the indicator at around 1.0545 will act as support.

Description of indicators:

• Moving average (determines the current trend by smoothing volatility and noise). Period 50. Marked in yellow on the chart.

• Moving average (determines the current trend by smoothing volatility and noise). Period 30. Marked in green on the chart.

• MACD indicator (Moving Average Convergence/Divergence - convergence/divergence of moving averages). Fast EMA period 12. Slow EMA period 26. SMA period 9.

• Bollinger Bands. Period 20.

• Non-commercial traders - speculators, such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting certain requirements.

• Long non-commercial positions represent the total long open positions of non-commercial traders.

• Short non-commercial positions represent the total short open positions of non-commercial traders.

• The total non-commercial net position is the difference between the short and long positions of non-commercial traders.