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MT5.com - EUR/USD: plan for the American session on October 16 (analysis of morning deals)

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Forex Analysis:::2020-10-16

EUR/USD: plan for the American session on October 16 (analysis of morning deals)

To open long positions on EURUSD, you need:

In the morning forecast, I paid attention to sales from the level of 1.1722, provided that a false breakout is formed. On the 5-minute chart, the first attempt to reach the resistance of 1.1722 was unsuccessful, however, the second test led to the formation of a false breakout, after which the bears immediately returned to the market, increasing pressure on the euro. However, there was no major downward movement, although there were all the prerequisites for this. Most likely, the reason is the news on Brexit, which is now the most important for the Forex market.

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In the second half of the day, all attention will also be focused on the level of 1.1722 and on actions in the area of this range. Now the bulls are trying to gain a foothold above this area, however, only a real break and a test of this range from top to bottom on the volume forms a signal to open long positions in the expectation of continuing the upward correction to the resistance area of 1.1756, where I recommend fixing the profits. If the bears manage to defend this range in the second half of the day after the release of the report on retail sales in the United States, it is best to postpone purchases and wait for the renewal of the weekly low, where the formation of a false breakout will be a signal for opening long positions. Otherwise, I recommend buying EUR/USD only for a rebound from the new low of 1.1644, based on a correction of 15-20 points within the day.

To open short positions on EURUSD, you need to:

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Sellers will continue to try to defend the resistance of 1.1722, however, news related to the EU's decision on a trade agreement with the UK may spoil everything. Don't rush to sell the pound. It is best to wait for the next unsuccessful attempt of the bulls to get above 1.1722 with a return under this range. Only this scenario will lead to the formation of a larger downward wave in the support area of 1.1688. An equally important task for the continuation of the bear market will be to break through this range, fixing under which will form a new signal to sell the euro with the main goal of testing a new minimum in the area of 1.1644, where I recommend fixing the profits. If the bulls turn out to be stronger in the second half of the day, it is best to postpone sales until the high of 1.1756 is updated, based on a correction from it of 15-20 points within the day.

Let me remind you that the COT report (Commitment of Traders) for October 6 recorded a reduction in long positions and an increase in short ones, which led to an even greater decrease in the delta. Buyers of risky assets believe in the continuation of the bull market, however, they prefer to proceed cautiously, as there is no good news on the Eurozone and the pace of economic recovery yet. So, long non-commercial positions decreased from level 241,967 to 231,369, while short non-commercial positions increased from 53,851 to 57,061. The total non-commercial net position fell to 174,308 from 188,116 a week earlier, indicating a wait-and-see position for new players. However, the bullish sentiment for the euro remains quite high in the medium term.

Signals of indicators:

Moving averages

Trading is conducted in the area of 30 and 50 daily moving averages, which indicates an active confrontation between buyers and sellers.

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

Only a break of the lower limit of the indicator around 1.1695 will increase the pressure on the euro and lead to a new fall.

Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-profit 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 the short and long positions of non-commercial traders.
Ruben Watson
Analyst InstaForex
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