FX.co ★ EUR/USD: trading plan for the US session on November 7th (analysis of morning deals). The euro continues to decline

In my morning forecast, I emphasized the level of 1.0695 and recommended making trading decisions based on it. Let's take a look at the 5-minute chart and analyze what happened there. The drop and the formation of a false breakout at this level provided a good signal to buy the euro. However, after moving up by 10 points, pressure returned to the pair. Nevertheless, sellers were unable to establish themselves below this range. For this reason, the technical picture was revised for the second half of the day.

To open long positions on EUR/USD:

The balance of foreign trade and the statements of a large number of FOMC representatives will keep volatility in the market. Given how traders reacted to Kashkari's statements yesterday that the rate hikes are not over yet, don't be surprised if the euro continues to fall after interviews with FOMC members Michael S. Barr, Christopher Waller, and John Williams. However, not all of the mentioned Federal Reserve representatives advocate a hawkish stance, so the second half of the day promises to be quite interesting. If pressure on the pair continues, only a false breakout in the area of the new support at 1.0675 will provide a good entry point for long positions, with the target being a return to the new resistance at 1.0710, formed during the first half of the day. Moving averages pass through this level, limiting the pair's further upside potential. Therefore, breaking and consolidating above this range will provide an opportunity for EUR/USD to surge with a new high for this week at 1.0753, where I will take profit. The ultimate target is the area at 1.0774. In the event of a decline in EUR/USD and a lack of activity at 1.0675 in the second half of the day, which is quite possible since there are not many buyers eager to purchase the Euro even during such a correction, pressure on the pair will return, leading to a more significant downward move towards 1.0642. Only a false breakout will form a market entry signal. I will consider opening long positions on a rebound from 1.0616 with a target of a 30-35 point intraday correction.

To open short positions on EUR/USD:

Sellers continue to try to re-enter the market, and they are doing so fairly successfully. The level where I expect significant players to enter is around 1.0710. Protecting this range is especially important for maintaining the downward correction of the pair. Therefore, a false breakout at 1.0710, combined with hawkish comments from FOMC representatives, will provide a selling signal with a move down to the next support at 1.0675. After breaking and consolidating below this range and an upward retest, I expect another selling signal with a target of 1.0642, which will help erase all of the Euro's gains from Friday. The ultimate target is the minimum at 1.0616, where I will take a profit. In the event of an upward move in EUR/USD during the American session and a lack of bears at 1.0710, which cannot be ruled out since the bullish market can return at any moment, buyers will likely try to reach the resistance at 1.0753. Selling there is an option, but only after an unsuccessful consolidation and a false breakout. I will consider opening short positions on a rebound from 1.0774 with a target of a 30-35 point downward correction.

In the COT (Commitment of Traders) report for October 31, there was a reduction in long and short positions. All of this was positioning ahead of the important meeting of the U.S. Federal Reserve, where decisions were made to maintain the policy unchanged. However, a more significant shift, which unfortunately is not reflected in this report yet, was likely influenced by weak U.S. labor market data indicating less active job growth. Such statistics recently strengthened the idea among investors that the Federal Reserve may no longer raise interest rates and may even end its aggressive policy by early next summer. This exerts and will continue to exert pressure on the U.S. dollar and lead to the strengthening of risky assets. In the COT report, it is stated that non-commercial long positions decreased by 4,735 to 210,834, while non-commercial short positions decreased by 4,871 to 125,445. As a result, the spread between long and short positions increased by 1,016. The closing price decreased to 1.0603 from 1.0613.

Indicator Signals:

Moving Averages:

Trading is conducted below the 30 and 50-day moving averages, indicating the possibility of further Euro decline.

Note: On the hourly chart H1, the author sets the period and prices for moving averages, which are different from the standard definition of traditional daily moving averages on the daily chart D1.

Bollinger Bands:

In the case of a decline, the lower boundary of the indicator around 1.0695 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 - converging/diverging moving averages). Fast EMA period 12. Slow EMA period 26. SMA period 9.
• Bollinger Bands. Period 20.
• Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet specific 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 short and long non-commercial positions.