FX.co ★ EUR/USD: trading plan for the US session on October 23rd (analysis of morning deals). The euro returned to its maximum of last week

In my morning forecast, I emphasized the level of 1.0603 and recommended making market entry decisions based on it. Let's look at the 5-minute chart and analyze what happened there. The rise and the formation of a false breakout at 1.0603 signaled selling the euro. However, at the time of writing this article, there hasn't been a significant downward movement. The technical picture was completely reassessed for the second half of the day.

To open long positions on EUR/USD:

During the American session, there are no fundamental data, so buyers have every chance to continue the upward momentum that formed last week after Federal Reserve Chairman Jerome Powell made it clear that no one intends to raise rates just like that. However, in the current conditions, considering that we are at last week's highs, it's preferable to act after a decline and the formation of a false breakout at the level of 1.0586, which was formed at the end of the first half of the day. Moving averages are located there, favoring buyers, which would signal entry into long positions with the target of retesting the resistance at 1.0612. Only a breakthrough and a top-down test of this range will strengthen demand for EUR/USD, providing an opportunity for further correction and a push towards 1.0638. The ultimate target will be the area around 1.0671, where I will make a profit. In the case of the EUR/USD decline and the absence of activity at 1.0586 in the second half of the day, bears will keep the pair within a sideways range. In this scenario, only the formation of a false breakout around 1.0558 will signal a buy opportunity for the euro. I will open long positions after a rebound from 1.0531, with the target of a 30-35 point intraday uptrend.

To open short positions on EUR/USD:

Sellers haven't shown themselves yet. For this reason, it's best to focus on protecting and forming a false breakout around 1.0612, which will provide a signal for selling with a move down to a new support at 1.0586. We can only talk about market control after a breakthrough and consolidation below this range, as well as a bottom-up test, which will signal selling with a target of 1.0558. The ultimate target will be the 1.0531 minimum, where I will take a profit. In the event of an upward movement of EUR/USD during the American session and the absence of bears at 1.0612, the bull market will continue to develop. In this scenario, I will postpone short positions until the resistance reaches 1.0638, which is this month's high. It can be sold, but only after an unsuccessful breakout. I will open short positions immediately after a rebound from the 1.0671 maximum, with the target of a 30-35 point downtrend.

In the COT (Commitment of Traders) report for October 10, there was a decrease in both long and short positions. Considering the recent US data and the high inflation in September this year, many traders and economists have doubts about whether the Federal Reserve will take a break or continue to raise borrowing costs during the November meeting. Given the ongoing war between Israel and Hamas, along with several negative consequences for the global economy, the demand for risk assets has sharply decreased under current conditions, which is an additional negative for the European currency. The tough stance of the European Central Bank is another problem for the euro, as the Eurozone's economy continues to contract. The only positive aspect is the significantly cheaper euro, which continues to attract traders' attention. The COT report indicates that long non-commercial positions decreased by 4,261 to 207,522, while short non-commercial positions only decreased by 850 to 131,990. As a result, the spread between long and short positions decreased by 5,519. The closing price increased to 1.0630, compared to 1.0509, confirming a minor upward correction of the euro.

Indicator Signals:

Moving Averages

Trading is conducted above the 30 and 50-day moving averages, indicating the possibility of further euro growth.

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

Bollinger Bands

In the case of a decline, the lower boundary of the indicator around 1.0570 will act as support.

Indicator Descriptions:

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