October 5, 2021

Forecast and trading signals for EUR/USD on October 5. Detailed analysis of the pair's movement and trade deals. The fuse of bulls dried up near the Kijun-sen line

 The EUR/USD pair traded rather sluggishly again during the first trading day of the week, passing about 50 points per day. An upward movement was observed for most of the day, which, however, ended near the critical Kijun-sen line. So for now, we can conclude that the correction, which we talked about in the last articles, ended very quickly. Although, of course, one should not make such high-profile conclusions - the upward movement may still resume. No important trade report published either in the US or in the European Union on Monday, so the influence of the fundamental background and macroeconomic reports was absent. As a consequence, traders had to make trading decisions based on pure technique. We can single out only three of the trading signals that deserve attention. However, traders could make good money out of it, given the volatility of the first trading day of the week. The quotes crossed the extremum level of 1.1612, which was a signal to buy, which should have been worked out. Further, the price rose to the critical line, from which a rebound followed. Therefore, at this moment, it was necessary to close long positions in profit of about 10 points and open short ones. Subsequently, the price dropped back to the level of 1.1612, where the short position should have been closed, since by that time the evening had already come - the time when we recommend everyone who trades intraday to exit the market. We managed to earn about 10-12 points more on the short position. Thus, two trades are both profitable.

You see that the euro/dollar pair began to correct after a rebound from the level of 1.1568 on the hourly timeframe. However, at the moment, the correction has stopped, as the bulls did not manage to overcome the critical line. Thus, the correction may resume today, if the pair still manages to settle above the critical line, but so far everything is moving towards the fact that the downward movement will be resumed. We highlight the following levels for trading on Tuesday - 1.1541, 1.1568, 1.1612, 1.1666, 1.1704, as well as the Senkou Span B (1.1744) and Kijun-sen (1.1632) lines. The Ichimoku indicator lines can change their position during the day, which should be taken into account when looking for trading signals. Signals can be rebounds or breakthroughs of these levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price moves 15 points in the right direction. This will protect you against possible losses if the signal turns out to be false. There will be few macroeconomic statistics again on October 5. The European Union is scheduled to publish an index of business activity in the service sector, as well as a speech by European Central Bank President Christine Lagarde. Potentially, Lagarde's speech could affect the market, but last week several of her speeches took place at once and none of them provoked any movements in the euro/dollar pair. An index of business activity in the service sector will be published in the United States, as well as the index of business activity ISM, which is the most important report of the day. It can provoke a movement, but hardly a strong one, by 20-30 points.

The mood of non-commercial traders became "less bullish" again during the last reporting week (September 21-27). And in the near future it may become fully bearish, because at the moment the number of buy and sell contracts for major players is practically the same. This means that the mood is "neutral" at this time, but this word does not accurately reflect what is happening in the market. According to the mood of professional traders, there is now a clear down trend. Thus, the mood is not "neutral". During the reporting week, the Non-commercial group opened 7,000 buy contracts (longs) and 16,000 sell contracts (shorts). Thus, the net position decreased by 9,000. This is exactly what we talked about in the previous paragraph: traders at this time are actively getting rid of the euro currency, and, accordingly, buy the US dollar. Thus, at this time, the readings of the COT reports and the movement of the EUR / USD pair have a correlation. However, there are two important points to keep in mind. First, the Federal Reserve has not yet begun to roll back its QE. The second - the current downward movement - is still a correction against the global uptrend, in which the pair has been for a year and a half. Thus, the "foundation" and the COT reports give us the opportunity to assume that the fall of the euro will continue. But, recall, each hypothesis and assumption must be confirmed by specific technical signals. Now these signals are there.