EUR/USD 1H
The EUR/USD pair resumed its upward movement quite unexpectedly on the hourly timeframe on October 9, although it had experienced obvious problems with this several days before. However, the Kijun-sen line was once again overcome and the upward movement continued. An ascending channel was also formed on Friday, which now supports bull traders.
A price rebound from the upper line of this channel can trigger a downward correction. As we can see from the slope of the channel, the upward trend is not too strong, and corrections are quite frequent. Nevertheless, at a leisurely pace, the pair can reach the levels of $1.19 and $1.20 in the next two weeks.
EUR/USD 15M
Both linear regression channels turned to the upside on the 15-minute timeframe, which fully corresponds to the picture of what is happening on the hourly timeframe. Thus, there are no signs of starting a new round of the downward correction on the 15-minute chart.
COT report
The EUR/USD pair has risen in price by about 120 points during the last reporting week (September 29 – October 5). But in general, there are still no significant price changes for the pair. In fact, all trades are held in a horizontal range of 250-300 points. Thus, data from any Commitment of Traders (COT) report can only be used for long-term forecasting. The latest COT report showed that non-commercial traders, which we recall, are the most important group of traders in the forex market, closed 10,784 Buy-contracts (longs) and opened 2,078 Sell-contracts (shorts).
Take note that two weeks earlier, the “non-commercial” group was relatively active in building up long positions, but now it is decreasing its net position for the second consecutive week. This may indicate that the upward trend for the pair is over. Or it is about to end. We have already said that the lines of the net positions of the “commercial” and “non-commercial” groups (upper indicator, green and red lines) diverge strongly when a trend change occurs.
If this is the case, the peak point of the upward trend will remain at $1.20. The net position of non-commercial traders was at its highest (green line) at this point. After reaching this level, it falls steadily. Thus, the pair may try to make another upward breakthrough as a final assault on the bulls, but you should hardly expect the pair to go much higher than the 20 figure.
No macroeconomic background for EUR/USD on Friday, October 9, while the fundamental background remained unchanged. We have already mentioned that the probability of strengthening the US dollar before the presidential elections in the United States is extremely low. Thus, by and large, news and reports, in principle, do not have a strong impact on the pair’s movement.
Traders simply do not risk serious dollar investments when they don’t understand what will happen to the country in a month or two. A trade war with China, its development or de-escalation depends entirely on who will become the new owner of the White House. If it is Trump again, then there is no doubt that the war with China will continue. And, as we have already figured out in the previous articles, the results of the confrontation with China for America are very dubious.
So the equation is extremely simple: Trump’s election victory = de-escalation of the trade war = new challenges for the American economy. That is why the majority of market participants do not risk investing in the dollar at this time.
We have two trading ideas for October 12:
1) The pair was in an open flat for several days, but now it is moving up. Thus, buyers can continue to trade the pair upward while aiming for 1.1855 and the resistance area at 1.1888-1.1912, as long as the price remains above the Kijun-sen line (1.1778). Take Profit in this case will be up to 80 points. We draw your attention to the fact that the price is often corrected.
2) Bears have not been able to build on their success and gain a foothold below the support area of 1.1701-1.1725. Thus, sellers need to wait for the next chance and to get the price to settle below the rising channel in order to open new short positions while aiming for the Senkou Span B line (1.1710). In this case, the potential Take Profit is up to 40 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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