EUR/USD: the plan for the American session on October 4 (analysis of morning deals). The euro continues to recover.

To open long positions on EURUSD, you need:

Despite the weak data on the eurozone investor confidence indicator, the euro continued its upward correction, which was expected at the beginning of the week. Let's look at the 5-minute chart and talk about the entry points formed in the first half of the day. The first attempt to consolidate above 1.1611 was unsuccessful, which led to the formation of a false breakdown and a signal to open short positions. However, it did not come to the realization of this entry, and a false breakdown was formed at this level with a signal to buy euros. This entry point was already much more profitable, which led to a 25-point increase in the euro. The second half of the day is also scarce on fundamental statistics, so the bulls may test their strength and try to break above the resistance of 1.1641, to which the pair is gradually approaching. Even good data on the change in the volume of production orders in the United States is unlikely to harm the mood of euro buyers. A breakthrough and consolidation above the 1.1641 range will lead to the formation of a new signal to buy the euro with the prospect of recovery to the 1.1670 area. A more distant goal will be a maximum of 1.1699, where I recommend fixing the profits. If the pressure on the euro returns, and this will happen due to an unsuccessful consolidation above 1.1641, then it is best to wait for a downward correction of the pair and look at the level of 1.1611. Moving averages pass below this range, which allows us to count on the formation of a false breakdown in this area, which will confirm the entry into long positions in the continuation of the ascending market. In the scenario of the absence of bull activity at the level of 1.1611, I advise you to postpone purchases until you return to the support area of 1.1585. It is possible to open long positions immediately for a rebound only at the local support of last week 1.1564 - and all this is only based on an upward correction of 15-20 points within the day.

To open short positions on EURUSD, you need:

The situation for the euro sellers is quite delicate since we did not see any active resistance on their part in the first half of the day, although there were attempts to protect 1.1611. The important task of the bears for the second half of the day will consist of defending the resistance of 1.1641. Only the formation of a false breakdown there and strong US data will lead to the formation of a signal to open short positions with the aim of a downward correction in the afternoon to the area of intermediate support 1.1611, which the bears missed today. A breakthrough and a reverse test from the bottom up of this level will push EUR/USD even lower - to the area of 1.1585, where I recommend fixing the profits. A longer-term target will be the weekly minimum of 1.1564. However, something out of the ordinary must happen in the market for us to see such a large drop in the pair. In case of a breakout of local lows and the absence of sellers at 1.1641, it is best to postpone sales until the test of a larger resistance of 1.1670 or open short positions immediately for a rebound based on a downward correction of 15-20 points from the new high of 1.1699.

The COT report (Commitment of Traders) for September 21 recorded a sharp increase in short positions and only a slight increase in long ones due to the lack of desire among traders to bet on strengthening risky assets at the beginning of autumn this year. The prospect of changes in the monetary policy of the Federal Reserve System in November this year keeps the demand for the US dollar, as many investors expect the central bank to begin reducing the bond purchase program. The fact that inflation in the United States of America is almost out of the control of the Fed suggests possible more aggressive actions by the end of the year, which could seriously affect the mood of traders and investors. This week, there will be many speeches by both representatives of the Fed and Chairman Jerome Powell, which can shed light on how the central bank will act in a given situation. Given that energy prices continue to fly up, which will necessarily affect the producer and consumer price index, specifics from the Federal Reserve System certainly would not harm the markets. Demand for risky assets will remain limited due to the high probability of another wave of coronavirus spread and its new Delta strain. All this will force the European Central Bank to continue to adhere to a wait-and-see position and maintain a stimulating policy at current levels since there are no serious inflationary problems in the eurozone yet. The COT report indicates that long non-commercial positions have grown quite a bit - from the level of 186,554 to the level of 189,406, while short non-commercial positions have jumped quite seriously - from the level of 158,749 to the level of 177,311. At the end of the week, the total non-commercial net position dropped from the level of 27,805 to the level of 12,095. The weekly closing price also fell to 1.1726 from 1.1809.

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 daily moving averages, which indicates the continuation of the upward correction of the pair.

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

Bollinger Bands

In case of a decline, the lower limit of the indicator in the area of 1.1585 will act as support.

Description of indicators