EUR/USD 1H
The EUR/USD pair continued to move down on the hourly timeframe on September 24, and only began a new round of upward correction by the end of the day. So far it’s weak. Yesterday, the bears managed to overcome the support level of 1.1663, while the pair’s quotes are located in the lower part of the descending channel. Thus, an upward correction is really brewing at this time.
The closest targets for this correction are the 1.1704-1.1728 resistance area and the Kijun-sen line (1.1750). Thus, rebounding from any of these resistances will trigger a resumption of the downward movement. So far there are no buyers on the market and they do not get involved in the struggle before overcoming the critical line. We have already mentioned several times that the pair’s downward movement has been brewing for at least a month. Thus, it has purely technical reasons.
EUR/USD 15M
Both linear regression channels are directed to the downside on the 15-minute timeframe, indicating that the downward movement will continue. The EUR/USD pair continued to trade in the horizontal channel of $1.17-1.19 during the reporting week. Therefore, all changes in the mood of professional traders did not show on the pair’s chart.
Non-commercial traders closed as many as 17,000 Buy-contracts (longs) and only 1,500 Sell-contracts (shorts) during the reporting week (September 9-15). Thus, the sentiment of the most important group of traders, “non-commercial”, has become bearish. The net position for this group also decreased by 15,000 contracts. In turn, this means that professional traders began to look towards buying the US dollar and selling the euro. Commercial traders actively closed both types of contracts. However, we are less interested in this group.
The results of all these changes appeared only by the end of this week (quotes still left the horizontal channel of $ 1.17-1.19), which will not even be included in the new COT report, set to be released today. And the nature of the pair’s movement has not changed much during September 16-22. At least it was still not possible to get out of the horizontal channel, and falling to the next level of 1.1700 is not something extraordinary. Thus, the new COT report may signal changes, but there were none on the foreign exchange market for the reporting period (!).
No important macroeconomic events in either the European Union or America on Thursday, September 24. Traders did not react to new testimonies from Federal Reserve Chairman Jerome Powell and Treasury Secretary Stephen Mnuchin before the US Congress.
However, new insider information appeared from a person close to the US treasury secretary, it states that in the near future Mnuchin plans to resume negotiations with Speaker of the House of Representatives Nancy Pelosi regarding a new aid package for the US economy. “If the Democrats are ready to sit down at the negotiating table, then I am ready to do so at any time in order to sign a bipartisan agreement,” Mnuchin said.
Powell believes that without a new bailout package, the US economy will start to slow down again. In addition to this information, a report on claims for unemployment benefits was just published, which showed no significant changes compared to the report a week ago.
We have two trading ideas for September 25:
1) Buyers remain outside the market, but they can be active at any time. Therefore, we recommend considering long positions if the pair settles above the Kijun-sen line (1.1750), while aiming for the Senkou Span B line (1.1818) and the resistance area of 1.1894-1.1910. Take Profit in this case will be from 50 to 120 points.
2) Bears reached the support level of 1.1663 in half, but could not continue to confidently move down. Thus, an upward correction is very likely now, and you are advised to open new sell-positions after it has ended, near the 1.1704-1.1728 area or the Kijun-sen line, while aiming for support levels of 1.1663 and 1.1588. In this case, the potential Take Profit is up to 100 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.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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