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EUR/USD 1H
The euro/dollar pair settled below the upward trend line on the hourly timeframe on October 7, however, it could not continue to move down, and it almost immediately turned back up, so at the moment it is absolutely unclear whether the upward trend is broken. Moreover, the price crossed both the Senkou Span B and Kijun-sen lines. Thus, we tend to think that traders simply traded in the wrong direction yesterday, but today they realized this, which led to a movement in the opposite direction. Unfortunately, this does not in any way facilitate the current technical picture. The only thing that can be emphasized is that the price could not settle below the support area of 1.1700-1.1724, therefore, it is not advisable to trade for a fall.
EUR/USD 15M
The higher linear regression channel turned down on the 15-minute timeframe, while the lower one turned to the upside. This suggests that the upward movement may resume in the short term. Actually, we came to approximately the same conclusions when analyzing the hourly timeframe.
COT report
The EUR/USD pair grew by around 30 or 40 points during the last reporting week (September 23-29). We can't even call it growth, just common market noise. The previous Commitment of Traders (COT) report showed that non-commercial traders opened 15,500 new Buy-contracts (longs) and almost 6,000 Sell-contracts (shorts). Thus, the net position for this group of traders increased by around 9,000. The new report clearly reflects what is currently happening in the foreign exchange market. Professional traders closed 4,500 contracts for buy positions on the euro and 3,300 contracts for sell positions during the reporting week. That is, the net position for the "non-commercial" group has decreased by around a thousand contracts, which means that the mood of large traders has become a little more bearish. However, these are not changes that can be acknowledged as global. Therefore, we conclude that the situation has not changed dramatically. The EUR/USD pair generally stood in one place for the next three trading days (after September 29). Therefore, the next COT report may also show minimal changes in the mood of professional traders. Looking at the chart showing the net positions of all categories of traders, we can conclude that a major downward reversal is brewing for the euro. Usually, when the green and red lines are far away from each other, it is the harbingers of a global reversal.
No important macroeconomic reports on Wednesday, October 7. But, as usual, there was a huge amount of news. All of them have been discussed in detail in the fundamental articles of this site. We would only like to draw your attention to the fact that US President Donald Trump's decision from the day before yesterday, in regards to his intention to break off negotiations with the Democrats on a new stimulus package for the American economy, is more likely a negative factor for the dollar than a positive one. However, the US dollar rose in price immediately after this was announced, it was rather illogical. The dollar was already falling yesterday, although there was no reason for this during the day. Therefore, we believe that traders simply did not quite correctly react to Trump's announcement, and then they rushed to correct the situation in the morning. European Central Bank Vice President Luis de Guindos is set to speak in the European Union today. We can also expect a report from the United States on applications for unemployment benefits, which is considered quite accurate in displaying real unemployment in the country.
We have two trading ideas for October 8:
1) It is much more difficult to predict the pair's behavior now since trades of the previous days ruined the technical picture. Buyers can continue to trade the pair upward with the targets at the resistance levels of 1.1786 and 1.1855, but only in small lots and with extreme caution, since the upward trend line has been broken. Long positions will be canceled if the price drops below the Senkou Span B and Kijun-sen lines again. Take Profit in this case will be from 20 to 80 points.
2) Bears made an attempt to reverse the upward trend yesterday, but only managed 50% of the task. They still need to take the pair below the Kijun-sen (1.1752) and Senkou Span B (1.1690) lines. In this case, we recommend opening new short positions while aiming for 1.1631. In this case, the potential Take Profit is up to 50 points.
Explanations for illustrations:
Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.
Support and resistance areas are areas from which the price has repeatedly rebounded off.
Yellow lines are trend lines, trend channels and any other technical patterns.
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