18.10.202417:35 Forex Analysis & Reviews: EUR/USD: Trading Plan for the U.S. Session on October 18th (Analysis of Morning Trades)

In my morning forecast, I focused on the 1.0849 level and planned trading decisions accordingly. Let's look at the 5-minute chart to see what happened. The rise and formation of a false breakout provided an excellent entry point for selling the euro, resulting in a 10-point drop before the pressure on the trading instrument eased. The low volatility following yesterday's ECB meeting suggests a lack of selling interest and caution among potential buyers. The technical outlook for EUR/USD in the second half of the day remains unchanged.

For opening long positions on EUR/USD:

In the second half of the day, we await data on the number of building permits issued in the US, as well as speeches from FOMC members Raphael Bostic and Neel Kashkari. If euro buyers can withstand the pressure after statements from the Fed representatives, we can expect a further correction in the euro by the end of the week. In the event of another decline in EUR/USD following the Fed speeches, only a false breakout around the 1.0813 support level, which held up well yesterday, will provide a suitable condition for increasing long positions. This would open the way to the 1.0849 level. A breakout and retest of this range would confirm a proper entry point for a buying opportunity, with the target of testing 1.0882. The ultimate target will be the 1.0915 high, where I plan to take profit. If EUR/USD declines and there is no buying interest around 1.0813 in the second half of the day, pressure on the euro will continue within the trend, increasing pressure on buyers. In that case, I would consider entering only after a false breakout near the next support level of 1.0783. I plan to open long positions immediately on a rebound from 1.0761, aiming for an upward correction of 30-35 points intraday.

For opening short positions on EUR/USD:

Despite the euro's slight rise, sellers still maintain control over the market. If another false breakout forms around 1.0849, where moving averages favor sellers, it could provide an entry point for new short positions, targeting a further decline to the 1.0813 support. A breakout and consolidation below this range, which has already been tested today, as well as a retest from below, will offer another good opportunity for a sell-off toward 1.0783, reinforcing the bearish market. It is only at this level that I expect to see more active bulls. The ultimate target will be the 1.0761 level, where I will take profit. If EUR/USD rises in the second half of the day and bears do not appear at 1.0849, which seems likely given the current lack of enthusiasm among sellers, buyers may get a chance for a correction. In this case, I will delay selling until testing the next resistance at 1.0882. I will also sell there but only after a failed consolidation. I plan to open short positions immediately on a rebound from 1.0915, targeting a downward correction of 30-35 points.

The COT report from October 8 showed a sharp increase in short positions and a reduction in long ones. The report already accounts for the latest data on the US labor market, but not yet the inflation data, which likely only increased the number of short positions on the euro. Currently, everything favors the U.S. dollar, and only strong European statistics in the near future could halt the bearish market for the trading instrument. However, this does not rule out a medium-term upward trend for the pair, and the lower the pair goes, the more attractive it becomes for purchases. The COT report indicates that long non-commercial positions decreased by 4,407 to a level of 173,866, while short non-commercial positions increased by 11,822 to a level of 134,768. As a result, the gap between long and short positions narrowed by 1,402.

Indicator Signals:

Moving Averages

Trading is taking place around the 30 and 50-day moving averages, indicating market uncertainty.

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

Bollinger Bands

In the event of a decline, the lower boundary of the indicator around 1.0813 will serve as support.

Indicator Descriptions:

• Moving average: Determines the current trend by smoothing out volatility and noise. Period – 50. Marked in yellow on the chart.
• Moving average: Determines the current trend by smoothing out 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 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.
• Net non-commercial position: The difference between the short and long positions of non-commercial traders.