Yesterday, the pair formed several entry signals. Let's have a look at what happened on the 5-minute chart. In my morning review, I mentioned the level of 1.0538 as a possible entry point. A decline and a false breakout at this mark formed a buy signal, sending the pair up by more than 25 pips. In the afternoon, long positions near 1.0538 made it possible for traders to take about 30 more pips of profit.
For long positions on EUR/USD:
The EUR/USD fell after US Retail Sales beat market expectations, but then traders realized that the latest figures compared to August would reduce inflationary pressures, which sent the USD broadly lower. Today, market participants can keep an eye on the Eurozone Consumer Price Index and European Central Bank President Christine Lagarde's speech. It is hard to say how the euro will react to the CPI data. It is better to listen to Lagarde and see her assessment of the situation. Recently, she has spoken negatively about rising energy prices, which, in her opinion, is bound to trigger a rise in the CPI. Let's see. In case the pair falls, I will act near the new support level at 1.0563, formed by yesterday's results. A false breakout at this mark will confirm the entry point for long positions, in hopes of building an upward correction. The target will be the resistance level at 1.0594. A breakout and a downward test of this range will provide a chance for a surge to 1.0617. The furthest target would be the 1.0638 area, where I plan to take profits. If EUR/USD declines and there is no activity at 1.0563, which is in line with the bullish moving averages, pressure on the euro could increase, and the bears will reclaim the upper hand. In such a case, only a false breakout near 1.0540 will signal a buying opportunity. I will open long positions directly on a rebound from 1.0517, aiming for an upward correction of 30-35 pips within the day.
For short positions on EUR/USD:
The sellers are no longer in control of the market. In order for the pair to fall, the bears need to defend the new resistance at 1.0594, as well as weak eurozone data, or dovish rhetoric from the ECB president. A false breakout there will provide an entry point, targeting the support level at 1.0563. Only after breaching this range and settling below it, and after completing an upward retest, do I anticipate another sell signal with a target at 1.0540. The furthest target is the 1.0517 low, where I plan to take profit. If EUR/USD moves upward during the European session and lacks bearish activity at 1.0594, bulls will extend the upward correction. In such a scenario, I would delay short positions until the price hits the resistance at 1.0617. I would also consider selling there but only after an unsuccessful consolidation. I will open short positions directly on a rebound from the high of 1.0638, considering a downward correction of 30-35 pips.
COT report:
The Commitments of Traders report for October 10 recorded a fall in both long and short positions. Given the recent US data and the high inflation rate in September, many traders and economists have doubts about whether the Federal Reserve will take a pause or continue to raise interest rates in the November meeting. Considering the war between Israel and Hamas, as well as a number of negative consequences for the world economy, the demand for risky assets in the current conditions has also sharply decreased, which doesn't help the euro's case. The ECB's tight stance is another problem as the eurozone economy continues to contract. The only positive thing is that the euro has significantly depreciated in value, which continues to attract the attention of traders. The COT report indicates that non-commercial long positions fell by 4,261 to stand at 207,522, while non-commercial short positions were down by 850, reaching a total of 131,990. As a result, the spread between long and short positions fell by 5,519. The closing price rose to 1.0630 from 1.0509, confirming a slight bullish correction in the euro.
Indicator signals:
Moving averages:
Trading above the 30- and 50-day moving averages indicates that buyers are regaining control of the market.
Please note that the time period and levels of the moving averages are analyzed only for the H1 chart, which differs from the general definition of the classic daily moving averages on the D1 chart.
Bollinger Bands
If EUR/USD declines, the indicator's lower border around 1.0550 will serve as support.
Description of indicators:
• A moving average of a 50-day period determines the current trend by smoothing volatility and noise; marked in yellow on the chart;
• A moving average of a 30-day period determines the current trend by smoothing volatility and noise; marked in green on the chart;
• MACD Indicator (Moving Average Convergence/Divergence) Fast EMA with a 12-day period; Slow EMA with a 26-day period. SMA with a 9-day period;
• Bollinger Bands: 20-day period;
• Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements;
• Long non-commercial positions represent the total number of long positions opened by non-commercial traders;
• Short non-commercial positions represent the total number of short positions opened by non-commercial traders;
• The non-commercial net position is the difference between short and long positions of non-commercial traders.
