27.10.202108:53 Forex Analysis & Reviews: EUR/USD: plan for the European session on October 27. COT reports. American economy demonstrates strength and confidence - US dollar reacts with growth

To open long positions on EUR/USD, you need:

Yesterday was a good enough day for trading. And if in the first half of the day it was not possible to wait for signals to enter the market, then the second half was much better. Let's take a look at the 5 minute chart and see what happened. The update of the 1.1616 level, which I drew attention to in my forecast, occurred without volume and any significant changes in the balance of power. This indicated the lack of willingness to sell the euro after it fell the day before. There was also no normal long entry point after the 1.1616 breakthrough. All this forced me to revise the technical picture for the second half of the day. During the US session, the bulls reached the resistance of 1.1625, but failed to get above this range. As a result, an excellent signal to open short positions was formed, which quickly pushed EUR/USD into the support area of 1.1598, allowing more than 25 points of profit to be taken from the market.

This morning, although reports on the eurozone will be released, it does not belong to the important category, and it is unlikely to significantly affect the market, which may allow EUR/USD to slightly recover its positions in the first half of the day. If the data on the volume of lending to the private sector in the eurozone and the leading index of the consumer climate in Germany turn out to be much better than economists' forecasts - the bulls will aim for resistance of 1.1612, on which quite a lot depends today. Weak numbers are unlikely to allow euro bulls to rise above this resistance. Only its momentum, as well as a reverse test from top to bottom, can create a signal to buy the euro, which will allow us to see an upward correction after yesterday's fall of the pair in the afternoon. The initial target will be the resistance at 1.1630. A similar breakthrough and test of this level from top to bottom creates another entry point to long positions, which will open the way to 1.1649 and 1.1668, where I recommend taking profits. If the pressure on the pair persists, an equally important task for the bulls will be to protect the lower boundary of 1.1590. Forming a false breakout there creates a good entry point into long positions. If there is no buying activity at this level, I advise you to postpone long positions to the 1.1568 area. It is best to buy the pair immediately on a rebound from the low of 1.1542 and counting on a correction of 15-20 points within the day.

To open short positions on EUR/USD, you need:

Euro bears have quite simple tasks - to defend 1.1612 and break through the support at 1.1490. Forming a false breakout at the level of 1.1612 will return the real pressure to EUR/USD, while weak data on the eurozone will help push the pair to the lower border of 1.1590. A breakthrough and test of this level from the bottom up will result in creating a signal to open new short positions, followed by a fall to the 1.1568 area. A breakthrough of this range will lead to the demolition of the bulls' stop orders located below - this will quickly bring EUR/USD to 1.1542 and open a direct path to 1.1510, where I recommend taking profit. In case the pair rises in the first half of the day and the bears are not active at the level of 1.1612, and there are moving averages playing on their side, it is best to postpone selling until the test of the 1.1630 high, above which the bulls did not break through yesterday. It is possible to open short positions immediately on a rebound in the expectation of a downward correction of 15-20 points from a large resistance at 1.1649.

I recommend for review:

The Commitment of Traders (COT) report for October 19 revealed that both short and long positions declined, which led to a slight recovery in the negative delta, as more bears than bulls left the market than. Inflation in the eurozone came out last week, which rose and coincided with economists' expectations. This has forced many representatives of the European Central Bank to revisit the topic of changes in monetary policy. However, the fact that virtually everyone stuck to a wait-and-see attitude and retained stimulus measures in the form of bond purchases after the end of the PEPP program in March next year put some pressure on the European currency. The slowdown in manufacturing and services in the eurozone also prevented euro bulls from getting beyond the 17th figure. However, a key problem in the short term, negatively affecting the euro's growth, is the sharp spread of the fourth wave of coronavirus infection throughout the European Union. In the United States of America, the strong recovery in the economy continues to support the greenback. The fact that the Federal Reserve is already seriously considering curtailing the bond purchase program at its next meeting in November will also limit the euro's upside potential against the US dollar. The COT report indicated that long non-commercial positions fell from 202,512 to 193,320, while short non-commercial positions fell from 220,910 to 205,427 against -18 398. The weekly closing price rose to the level of 1.1613 against 1.1553.

Indicator signals:

Trading is carried out below the 30 and 50 daily moving averages, which indicates an attempt by the bears to continue the pair's downward correction.

Moving averages

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

Bollinger Bands

In case of growth, the upper border of the indicator in the area of 1.1625 will act as a resistance. The lower border of the indicator around 1.1585 will act as a support.

Description of indicators

• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
• MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-commercial speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain 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.
• Total non-commercial net position is the difference between short and long positions of non-commercial traders.