21.10.202008:56 Forex Analyse & Reviews: EUR/USD: plan for the European session on October 21. COT reports. Euro buyers inspired by Lagarde's statements, pushing the pair towards the 19th figure

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

Euro buyers were encouraged by European Central Bank President Christine Lagarde's statements from yesterday regarding a new emergency plan worth 750 billion euros and claiming that it could become "eternal", as well as progress in negotiations on a plan to help the US economy. Buyers of the euro went beyond the 18th figure, aiming for the 19th. As for yesterday's deals, a false breakout at the 1.1765 level formed the first entry point into long positions in the morning, as a result, the pair quickly reached the next resistance at 1.1793. The breakout of this range caused the pair to rise to the 1.1824 area, where the bulls also managed to achieve another signal to open long positions after testing this level from top to bottom, which brought about 20 more points of profit.

Exchange Rates 21.10.2020 analysis

At the moment, the euro will continue to grow as long as trading is above support at 1.1824. The nearest target is resistance at 1.1868, breakout and settling above it, will open the opportunity for euro buyers to push the pair to the high of 1.1915, where I recommend taking profits. No important fundamental data today, which could maintain the bullish momentum in the pair. A more optimal scenario for opening long positions will be a downward correction in the pair to the support area of 1.1824, where a false breakout forms a good entry point to the market. Moving averages, playing on the side of buyers, also pass below this level. In case bulls are not active, then it would be best to postpone long positions until a larger support at 1.1793 has been updated, counting on a rebound of 15-20 points within the day. The lower border of the new ascending channel, formed this Monday, is also located there.

The Commitment of Traders (COT) report for October 13 showed a decrease in long positions and an increase in short ones, which led to an even greater decline in the delta. Despite this, buyers of risky assets believe that the bull market will continue, but they prefer to act with caution, as there is no good news for the eurozone yet. Thus, long non-commercial positions decreased from 231,369 to 228,295, while short non-commercial positions increased from 57,061 to 59,658. The total non-commercial net position decreased to 168,637, against 174,308 a week earlier. which indicates a wait-and-see attitude from new players, however, bullish sentiments for the euro remain rather high in the medium term. The more the euro will decline against the US dollar at the end of this year, the more attractive it will be for new investors.

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

Sellers need to defend resistance at 1.1868, since a lot depends on it. Forming a false breakout at this level in the first half of the day, together with confirmation of the divergence, which is now visible on the MACD indicator, will be a signal for completing the bull market and will also produce a downward correction. Under this condition, you can open short positions in euros in order to return to the support level of 1.1824, just below which the moving averages are. However, it will be possible to speak of greater bearish pressure and potentially taking control of the market after we have settled below 1.1824, which forms a good signal to sell the euro in the 1.1793 area, and the next target will be the low of 1.1765, where I recommend taking profit, since there is also the lower border of the new ascending channel. In case EUR/USD grows further along the trend and it breaks through resistance at 1.1868, I recommend not to rush to sell, but wait until the new high of 1.1915 has been updated, or open short positions immediately on a rebound from the resistance of 1.1964, counting on a correction of 15-20 points within the day.

Exchange Rates 21.10.2020 analysis

Indicator signals:

Moving averages

Trading is carried out above the 30 and 50 moving averages, which indicates the bullish sentiment in the market.

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 classic daily moving averages on the D1 daily chart.

Bollinger Bands

A breakout of the upper border of the indicator in the 1.1850 area will cause EUR/USD to rise. In case the pair falls, support will be provided by the lower border of the indicator in the 1.1793 area.

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.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Uitgevoerd door Ruben Watson,
Analytische expert
InstaForex Group © 2007-2020
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