empty
 
 
15.10.2021 09:47 AM
EUR/USD: Trading plan for European session on October 15, 2021. Commitment of Traders report. Euro bulls fail to consolidate at weekly highs

Long positions in EUR/USD:

Although euro bulls updated weekly highs yesterday, they seem to be stuck in another channel. Several signals to enter the market were generated yesterday. Let's now look at the M5 chart and analyze them. In the first half of the day, EUR extended gains. However, bulls stumbled at 1.1611 and failed to consolidate. As a result, a false breakout occurred. It led to the formation of a sell signal. In the second half of the day, EUR recovered slightly but again failed to consolidate above 1.1622, and another sell signal was formed. The price plunged by 30 pips. Two false breakouts occurred near the support level of 1.1589 during the North American session, and a sell signal was generated.

This image is no longer relevant

The eurozone will present its inflation data today, which may boost EUR in the first half of the day. Technically, nothing has changed since yesterday, apart from the nearest support and resistance levels. However, the strategy remains the same. Firstly, bulls should break and consolidate above 1.1614. A test of this level top/bottom should give a buy signal. In such a case, the pair is expected to recover to the high of 1.1637. A breakout of this range with a similar test top/bottom will allow bulls to build a new upward trend. If so, EUR/USD may strengthen to 1.1656, where it is wise to lock in profits. A further target is seen at the high of 1.1684. In case of a decline in EUR/USD, an equally important task for bulls will be to protect the support level of 1.1589. Moving averages are just above this level. In case of a false breakout there a strong buy entry point will be formed. Otherwise, if there is a lack of bullish activity, you should open long positions at 1.1559, where there is the lower boundary of the ascending channel formed on October 12. In addition, it is wise to buy EUR/USD immediately on a bounce from the lows of 1.1537 and 1.1482, allowing a correction of 15-20 pips.

Short positions in EUR/USD:

Bears were trying to gain control over the market during the North American session. However, all their attempts failed. Their main task for today remains to protect the resistance level of 1.1614. Disappointing data on inflation or trade balance in the eurozone may limit the pair's upside potential. In case of a false breakout near 1.1614, the quote is likely to come under pressure and plunge to the support level of 1.1589. A breakout and a test bottom/top of this level may lead to the formation of a sell signal, and EUR/USD will fall to 1.1559. Another target is seen at 1.1537. The bearish trend will resume if the price tests this level. If there is a lack of bearish activity at 1.1614, you should refrain from selling the pair until the price tests the resistance level of 1.1637 or open them from the new high of 1.1656 when the quote bounces, allowing a correction of 15-20 pips.

This image is no longer relevant

Commitment of Traders report:

The COT report as of October 5 logged a sharp increase in short positions and an uptick in long ones, which led to a reduction in the net position. Such a significant increase in short positions confirms a bearish market. Political problems in the United States, some of which have already been resolved, also affected the current positions of market players reflected in the COT report. The US Department of Commerce report published on Friday (it is not reviewed in this COT report) most likely will not affect the balance of power between bulls and bears, since the data came out mixed. It only confirms that the greenback will be bearish this week. The possibility of monetary policy changes by the Federal Reserve in November allows traders to increase the volume of long positions as many traders expect QE tapering to start by the end of the current year. Demand for risk assets will remain limited due to the ECB's wait-and-see stance. In the previous week, the ECB's president announced that the regulator would keep stimulus at the current levels. According to the COT report, long non-commercial positions rose to 196,819 from 195,043, while short non-commercial positions jumped to 219,153 versus 194,171. At the end of the week, the overall non-commercial net position went in the negative zone and dropped to -22,334 from 872. The weekly closing price also fell to 1.1616 from 1.1695.

This image is no longer relevant

Indicator signals:

Moving averages

Trading is carried out near 30- and 50-period MAs, reflecting the start of a new bullish trend.

Important! The period and prices of moving averages are viewed by the author on the hourly H1 chart and differ from the general definition of classic daily moving averages on the D1 chart.

Bollinger Bands

The euro is expected to grow if the price breaks the upper band at 1.1614. Otherwise, the lower band will provide support to the quote at around 1.1585.

Indicators:

  • Moving average (MA) determines the current trend by smoothing volatility and noise. Period 50. Colored yellow on the chart.
  • Moving average (MA) determines the current trend by smoothing volatility and noise. Period 30. Colored green on the chart.
  • Moving Average Convergence/Divergence (MACD). Fast EMA 12. Slow EMA 26. SMA 9.
  • Bollinger Bands. Period 20
  • 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 are the total long position of non-commercial traders.
  • Non-commercial short positions are the total short position of non-commercial traders.
  • The total non-commercial net position is the difference between short and long positions of non-commercial traders.
Miroslaw Bawulski,
Analytical expert of InstaForex
© 2007-2024
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST
  • Chancy Deposit
    Deposit your account with $3,000 and get $8000 more!
    In March we raffle $8000 within the Chancy Deposit campaign!
    Get a chance to win by depositing $3,000 to a trading account. Having fulfilled this condition, you become a campaign participant.
    JOIN CONTEST
  • Trade Wise, Win Device
    Top up your account with at least $500, sign up for the contest, and get a chance to win mobile devices.
    JOIN CONTEST
  • 100% Bonus
    Your unique opportunity to get a 100% bonus on your deposit
    GET BONUS
  • 55% Bonus
    Apply for a 55% bonus on your every deposit
    GET BONUS
  • 30% Bonus
    Receive a 30% bonus every time you top up your account
    GET BONUS

Recommended Stories

Can't speak right now?
Ask your question in the chat.
Widget callback