Yesterday, only one entry point into the market was formed. Let's take a look at the 5-minute chart and analyze what happened there. In my morning forecast, I focused on the 1.1591 level and planned to make entry decisions based on it. The pair declined, but due to low volatility, it did not reach the test of 1.1591. As a result, I was left without trades. In the second half of the day, a false breakout around 1.1623 provided a good entry point to sell the euro, resulting in a drop of more than 30 pips.

To open long positions on EUR/USD, it is required:

Good data on a sharp increase in the U.S. economic optimism index from RCM/TIPP led to a temporary strengthening of the dollar against the euro, but the market then turned to risk assets. Today, in the first half of the day, the euro may continue to rise. This will depend on the data for the services sector PMI index in the Eurozone, the composite PMI index, and the producer price index. Also today, European Central Bank President Christine Lagarde will give a speech. In the case of weak indicators and a correction in the EUR/USD pair, I expect the first manifestation of euro buyers around the support level of 1.1623, which acted as resistance just yesterday. The formation of a false breakout there will provide an entry point for long positions with the aim of recovering the pair to the resistance at 1.1651, which is the monthly high. A breakout and reverse test of this range will confirm the correctness of actions to buy the euro in anticipation of a larger spike in the pair to 1.1678. The furthest target will be the high at 1.1703, where I will take profit. Testing this level will strengthen the bullish market for the euro. In the scenario of a decline in EUR/USD and a lack of activity around 1.1623, pressure on the pair will return. Sellers will likely reach the next interesting level at 1.1591. Only the formation of a false breakout there will be a suitable condition for buying the euro. I plan to open long positions immediately on a rebound from 1.1558 with the aim of an upward correction of 30-35 pips intraday.

To open short positions on EUR/USD, it is required:

Sellers showed their presence but then lost control of the market. However, while trading is below 1.1651, the chances of keeping the trade within the channel will be quite good. For this reason, bears need to actively show themselves around 1.1651. The formation of a false breakout there will provide an entry point for short positions with the aim of moving the pair to the support level of 1.1623, where slightly lower moving averages support the bulls. A breakout and consolidation below this range against very weak PMI index data from Eurozone countries, along with a reverse test from bottom to top, will also be another suitable scenario for opening short positions with a movement toward 1.1591. The furthest target will be around 1.1558, where I will take profit. In the event of an upward move in EUR/USD and a lack of active bearish action around 1.1651, buyers will have a good opportunity to continue developing the bullish market. In this case, it would be best to postpone short positions until the 1.1678 level. I will sell there only after a failed consolidation. I plan to open short positions immediately on a rebound from 1.1703 with the aim of a downward correction of 30-35 pips.

Recommended for Review:

Due to the U.S. government shutdown, fresh Commitment of Traders data is not being published. As soon as the current report is prepared, we will publish it immediately. The latest data is only available from October 14.

The COT report (Commitment of Traders) showed a reduction in both long and short positions. Expectations of further Federal Reserve interest rate cuts continue to put pressure on the U.S. dollar. The COT report indicated that long non-commercial positions decreased by 12,897 to 243,010, while short non-commercial positions fell by 2,857 to 134,685. As a result, the spread between long and short positions increased by 5,744.

Indicator Signals:

Moving Averages

Trading is taking place above the 30 and 50-day moving averages, indicating further growth of the euro.

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

Bollinger Bands

In the event of a decline, the indicator's lower boundary around 1.1595 will act as support.

Description of Indicators

• Moving Average (determines the current trend by smoothing volatility and noise). Period – 50. Marked in yellow on the chart.
• Moving Average (determines the current trend by smoothing 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 that use the futures market for speculative purposes and meet specific 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.
• The total non-commercial net position is the difference between the short and long positions of non-commercial traders.