EUR/USD 5M

The euro/dollar pair stopped its upward movement and traded sideways all day on Tuesday. Volatility has declined sharply, but a downward correction has not begun, so the pair maintains some growth prospects after it has consolidated above the descending channel. In favor of the euro's growth (although it still looks rather doubtful) is the fact that the price settled above both lines of the Ichimoku indicator. However, it is still below all the lines of the Ichimoku indicator on the 24-hour time frame, so its long-term growth prospects are still vague. A flat may even begin on the 24-hour timeframe, which will look like up/down movements of 300-400 points on the hourly timeframe. You also need to be prepared for this. There was only one report on Tuesday - on industrial production in the US - which did not provoke any market reaction. It is also not necessary to expect important events this week, as the calendar is almost empty.

The 5-minute timeframe shows even better that the pair has been trading sideways all day. Exactly in the middle of this intraday horizontal channel is the level of 0.9844 and the Senkou Span B line. It was around these levels that five signals were formed at once, which is a pronounced sign of a flat. Traders could try to work out the first two of them. However, neither in the first nor in the second case did the price manage to move even 15 points in the right direction. Thus, a small loss was received, which is quite normal for a flat day.

COT report:

The Commitment of Traders (COT) reports in 2022 can be entered into a textbook as an example. For half of the year, they showed a blatant bullish mood of commercial players, but at the same time, the euro fell steadily. Then for several months they showed a bearish mood, and the euro also fell steadily. Now the net position of non-commercial traders is bullish again, and the euro continues to fall. This happens, as we have already said, due to the fact that the demand for the US dollar remains very high amid a difficult geopolitical situation in the world. Therefore, even if the demand for the euro is rising, the high demand for the dollar does not allow the euro itself to grow. During the reporting week, the number of long positions for the non-commercial group decreased by 3,200, while the number of shorts increased by 2,900. Accordingly, the net position decreased by about 6,100 contracts. This fact is not of particular importance, since the euro still remains "at the bottom". At this time, commercial traders still prefer the euro to the dollar. The number of longs is higher than the number of shorts for non-commercial traders by 38,000, but the euro cannot derive any dividends from this. Thus, the net position of the non-commercial group can continue to grow further, this does not change anything. Even if you pay attention to the total number of longs and shorts, their values are approximately the same, but the euro is still falling. Thus, it is necessary to wait for changes in the geopolitical and/or fundamental background in order for something to change in the currency market.

We recommend to familiarize yourself with:

Overview of the EUR/USD pair. October 19. Luis de Guindos believes that the euro/dollar pair will stabilize in the coming months.

Overview of the GBP/USD pair. October 19. Liz Truss will not voluntarily step down.

Forecast and trading signals for GBP/USD on October 19. Detailed analysis of the movement of the pair and trading transactions.

EUR/USD 1H

The downtrend still cannot be considered completely reversed on the hourly time frame, despite a solid rise over the past few days. However, the euro is close to trying to start forming a new upward trend. If it manages to overcome the Kijun-sen line on the 24-hour timeframe, which it has now rested on, this will significantly increase its chances for continued growth. On Wednesday, we highlight the following levels for trading - 0.9553, 0.9635, 0.9747, 0.9844, 0.9945, 1.0019, 1.0072, as well as Senkou Span B (0.9834) and Kijun-sen lines (0.9752). Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. There are also secondary support and resistance levels, but no signals are formed near them. Signals can be "rebounds" and "breakthrough" extreme levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price has gone in the right direction for 15 points. This will protect you against possible losses if the signal turns out to be false. The European Union will publish its inflation report for September on October 19, and this is the only important report of the day. Not even that important, since this is the second final value for September, and there is no doubt that we will see a value of 10.0% y/y. Thus, there may not be a reaction to this report.

Explanations for the chart:

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.

Indicator 1 on the COT charts is the size of the net position of each category of traders.

Indicator 2 on the COT charts is the size of the net position for the non-commercial group.