Trading Analysis

Trading Recommendations and Analysis for EUR/USD on October 22: The Market Sees No Reason for Pauses

Analysis of EUR/USD 5M

On Monday, the EUR/USD currency pair continued its steady downward movement. At the end of last week, the price made a slight upward correction, but this move can hardly be called a "correction." Monday showed that the market is not inclined toward pauses or corrections. If, even on the first trading day of the week, the euro declined with an empty economic calendar, it reflects the current market sentiment. We have repeatedly warned traders about the euro's overbought condition and unjustified high price. The euro appreciated throughout 2024 much more often than what fundamentals and macroeconomic factors warranted. And now, the time of reckoning has arrived. While one could argue that the market has begun to respond to the more dovish rhetoric of European Central Bank representatives, it's worth asking why it largely ignored the weak EU economy or the upcoming ECB rate cuts for most of this year. These factors were as evident as the anticipated easing of the Federal Reserve's policy.

Thus, the current drop in quotations does not surprise us. A correction does not have to start because the previous movement was "strong enough." Theoretically, the pair could decline by another 400 pips before beginning a correction. Moreover, at this time, there are no technical signals for buying. The pair has not even managed to hold above the trend line. Therefore, there are certainly no reasons to buy at this moment.

On Monday, two trading signals were formed. First, the pair settled below the Kijun-sen line, or rather, "detached" from it. Midway through the US trading session, it broke through the 1.0836 level. Thus, traders could open short positions in the morning. By evening, those positions could have been closed, as a correction in the pair is still anticipated, and the trade was profitable. Yet, the euro might continue its decline calmly on Tuesday.

COT Report:

The latest COT report is dated October 15. The above illustration clearly shows that the net position of non-commercial traders has remained bullish for a long time. The bears' attempt to gain dominance failed spectacularly. The net position of non-commercial traders (red line) declined in the second half of 2023 and early 2024, while commercial traders (blue line) increased. Currently, professional players are leaning towards selling, but buyers still hold the upper hand.

We still see no fundamental factors supporting the strengthening of the euro, and technical analysis shows that the price is in a consolidation zone—in other words, a flat. On the weekly timeframe, it is evident that since December 2022, the pair has been trading between 1.0448 and 1.1274. So, from a seven-month flat, we have moved into an 18-month one. As a result, further decline remains more likely.

The red and blue lines are moving closer together, indicating an increase in short positions on the euro, which is encouraging—especially given how long the euro has been rising. Over the last reporting week, the number of longs in the non-commercial group decreased by 4,500, while shorts increased by 17,400. Accordingly, the net position declined by 21,900. The euro's potential for further decline remains strong.

Analysis of EUR/USD 1H

In the hourly time frame, the pair continues its downward movement, which could mark the beginning of a new, extended downtrend. There is no point in discussing the fundamental and macroeconomic reasons for the dollar's decline—they don't exist. From a medium-term perspective, we expect nothing but a decline in the euro. A short-term correction is possible, but the price must at least hold above the trend line.

We highlight the following levels for trading on October 22—1.0658-1.0669, 1.0757, 1.0797, 1.0843, 1.0889, 1.0935, 1.1006, 1.1092, 1.1147, 1.1185, 1.1234, 1.1274, as well as the Senkou Span B line (1.0904) and the Kijun-sen line (1.0864). The Ichimoku indicator lines may shift throughout the day, which should be considered when determining trading signals. Don't forget to place a Stop Loss at break even if the price moves 15 pips in the intended direction, as this will protect against potential losses if the signal turns out to be false.

Christine Lagarde will give two speeches in the Eurozone on Tuesday, but there's no guarantee she will address monetary policy. If she doesn't, we can consider the events calendar empty.

Explanations for Illustrations:

Support and resistance levels: thick red lines around which movement may end. They are not sources of trading signals.

Kijun-sen and Senkou Span B lines: Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour chart. They are strong lines.

Extreme levels: thin red lines where the price previously rebounded. They are sources of trading signals.

Yellow lines: trend lines, trend channels, and other technical patterns.

Indicator 1 on COT charts: net position size of each trader category.

The material has been provided by InstaForex Company - www.instaforex.com #

How to Trade the GBP/USD Pair on October 21? Simple Tips and Analysis for Beginners

Analysis of Friday's Trades

1H Chart of the GBP/USD Pair

The GBP/USD pair continued to correct on Friday but remains below the trendline. Therefore, nothing changed on the last trading day of the week. Yes, the pound gained a bit more momentum due to the positive retail sales report in the UK, but we still cannot say that it is ready for a 200-300 pip rise. Moreover, we do not expect such a substantial correction, even if the price holds above the trendline. It should be remembered that the pound remains overbought and unjustifiably expensive even after three weeks of decline. The market has fewer and fewer reasons to sell the dollar, while the reasons to sell the pound are increasing. Market participants understand that the Bank of England will likely resume monetary policy easing soon since inflation in the UK has fallen below the target level.

5M Chart of the GBP/USD Pair

In the 5-minute time frame on Friday, many trading signals were generated around the 1.3043 level. The day's volatility was low again, totaling just 67 pips. Most of this volatility was driven by the retail sales report in the UK. Essentially, we saw a slight upward momentum after this report, and the pair remained flat for the rest of the day. The US reports caused a slight dollar strengthening but had little impact.

How to Trade on Monday:

In the hourly time frame, the GBP/USD pair has broken the uptrend and continues to decline. We fully support the pair's decline in the medium term, as we believe this is the only logical outcome. In the near term, the pound may attempt to correct, but for this to happen, it needs to at least consolidate above the trendline. In any case, with the current low volatility, expecting an intense and rapid rise is unlikely.

On Monday, the pair may resume its downward movement, as the trendline has not remained intact. Discussing buying positions is pointless as long as the price stays below the trendline. And even if a breakout occurs, it will likely only be a correction.

In the 5-minute time frame, trading can currently be conducted around the levels 1.2848-1.2860, 1.2913, 1.2980-1.2993, 1.3043, 1.3102-1.3107, 1.3145-1.3167, 1.3225, 1.3272, 1.3365, 1.3428-1.3440. On Monday, no significant events are scheduled in the UK or the US. As a result, volatility may decrease further, and the price may slowly "slide" through the trendline.

Basic Rules of the Trading System:

The strength of a signal is determined by the time it takes to form (bounce or break through a level). The less time it takes, the stronger the signal.
If two or more trades were opened with false signals around a certain level, all subsequent signals from that level should be ignored.
In a flat market, any pair can generate many false signals or none at all. In any case, it's better to stop trading at the first signs of a flat market.
Trading should be done between the start of the European session and the middle of the American session, after which all trades should be closed manually.
On the hourly time frame, trade signals from the MACD indicator are best used when there is good volatility and a trend confirmed by a trendline or channel.
If two levels are too close to each other (5 to 20 pips apart), consider them as a support or resistance zone.
When the price moves 20 pips in the intended direction, set a Stop Loss to break even.

What's on the Charts:

Support and Resistance Price Levels: These levels serve as targets when opening buy or sell positions. They can also be used as points to set Take Profit levels.

Red Lines: These represent channels or trend lines that display the current trend and indicate the preferred trading direction.

MACD Indicator (14,22,3): The histogram and signal line serve as a supplementary indicator that can also be used as a source of trading signals.

Important Speeches and Reports (always found in the news calendar) can significantly impact the movement of a currency pair. Therefore, trading should be done with maximum caution during their release, or you may choose to exit the market to avoid a sharp price reversal against the preceding movement.

For Beginners Trading on the Forex Market: It's essential to remember that not every trade will be profitable. Developing a clear strategy and practicing money management is key to achieving long-term success in trading.

The material has been provided by InstaForex Company - www.instaforex.com #

How to Trade the EUR/USD Pair on October 21? Simple Tips and Analysis for Beginners

Analysis of Friday's Trades

1H Chart of the EUR/USD Pair

On Friday, the EUR/USD pair made a minimal correction, but it still failed to break above the trendline positioned near the price for the last two weeks. Thus, we still cannot conclude that an upward correction has started. All we saw on Friday was a minimal pullback. A bounce off the trendline could trigger a new decline in the euro. We've already mentioned that we expect only a decline from the euro in the medium term. Of course, an upward correction would be more logical and easier to understand, but the need for a correction doesn't mean it has to start immediately. Yes, the euro has been falling for three weeks straight—so what? It could decline for another three weeks before a correction begins, as it is significantly overbought. On Friday, there were no significant reports in the Eurozone, and in the U.S., only two minor reports had no impact on market sentiment.

5M Chart of the EUR/USD Pair

In the 5-minute time frame on Friday, two trading signals were formed around the 1.0845-1.0851 area. The total daily volatility was 43 pips, so this trading day could have easily been skipped. Even if strong signals were generated, what profit can you expect if the pair moves only 43 pips from the day's low to high?

How to Trade on Monday:

In the hourly time frame, the EUR/USD pair continues to take its first steps toward a new downtrend. Now, this step looks more like a leap. Unfortunately, illogical dollar selling could resume in the medium term since no one knows how much longer the market will price in the Fed's monetary policy easing. However, there is currently a downward trend on the hourly chart. Further declines in the euro can be expected even without a correction, as it remains highly overbought. Still, a correction would look more technically appealing.

On Monday, novice traders can trade from the trendline, but keep in mind that volatility is currently very low, making it difficult to aim for more than 15-20 pips per trade.

Consider the levels 1.0726-1.0733, 1.0797-1.0804, 1.0845-1.0851, 1.0888-1.0896, 1.0940-1.0951, 1.1011, 1.1048, 1.1091, 1.1132-1.1140, 1.1189-1.1191. No significant events are scheduled for Monday in the U.S. or the Eurozone. Most likely, we will see another "quiet Monday."

Basic Rules of the Trading System:

The strength of a signal is determined by the time it takes to form (bounce or break through a level). The less time it takes, the stronger the signal.
If two or more trades were opened with false signals around a certain level, all subsequent signals from that level should be ignored.
In a flat market, any pair can generate many false signals or none at all. In any case, it's better to stop trading at the first signs of a flat market.
Trading should be done between the start of the European session and the middle of the American session, after which all trades should be closed manually.
On the hourly time frame, trade signals from the MACD indicator are best used when there is good volatility and a trend confirmed by a trendline or channel.
If two levels are too close to each other (5 to 20 pips apart), consider them as a support or resistance zone.
When the price moves 15 pips in the intended direction, set a Stop Loss to break even.

What's on the Charts:

Support and Resistance Price Levels: These levels serve as targets when opening buy or sell positions. They can also be used as points to set Take Profit levels.

Red Lines: These represent channels or trend lines that display the current trend and indicate the preferred trading direction.

MACD Indicator (14,22,3): The histogram and signal line serve as a supplementary indicator that can also be used as a source of trading signals.

The material has been provided by InstaForex Company - www.instaforex.com #

Trading Signals for EUR/USD for October 18-23, 2024: buy above 1.0866 (21 SMA - 2/8 Murray)

Early in the American session, the euro is trading around 1.0859, below the bearish trend channel that has been forming since September 30th. It reached the 2/8 Murray area and the 21 SMA, which in turn coincided with the top of the bearish trend channel, resulting in strong resistance.

In case the euro breaks the bearish trend channel and consolidates above 1.0866, the outlook could be positive for the euro. Therefore, EUR/USD could reach the psychological level of 1.10 which coincides with the 200 EMA around 1.1003.

Technically, the euro is showing a positive signal. So, we believe it could consolidate above 1.0864 in the next few days, which could be seen as a signal to buy in case EUR/USD settles above this area. Then, it could reach 6/8 of Murray at 1.1108.

Conversely, if the instrument returns below the 21 SMA and trades within the downtrend channel, EUR/USD could reach 1/8 Murray around 1.0803.

The material has been provided by InstaForex Company - www.instaforex.com #

Overview of GBP/USD on October 18; Now the Pound Is Oversold, but Only Locally

The GBP/USD currency pair traded higher on Thursday, which could mark the beginning of the long-awaited correction. We noted that the 1.3000 level is a psychological level from which the price might start a correction. However, it was impossible to predict precisely where the British currency would begin to rise. Let's first consider the technical aspects of the 4-hour time frame. The CCI indicator entered the oversold area, drew several bullish divergences, and re-entered the oversold area following the UK inflation report. In our view, this is enough for the British currency to show some growth. It's important to understand that the pound can also be oversold, though only locally. In other words, it had fallen too long in the short term. If the price now moves up to the 1.3150-1.3200 range, it would be enough to expect a resumption of the downtrend, which, in our opinion, has just begun.

Regarding the fundamental background, it supported the US dollar three months ago, six months ago, and even a year ago. Even though the US economy experiences rough patches, those are still better than the "recovery period" in the UK. We have already compared the US and UK economic states over the past two years. In reality, there's not much to compare. For two years, the market kept predicting a recession for the US while praising the British economy, even though it barely grew. Also, note that the Bank of England's rate was never higher than the Federal Reserve's rate during the entire hawkish policy period. It only surpassed it after September 18.

However, this doesn't mean that the BoE won't cut rates. This week, the UK inflation report was released, and no matter what the service or core inflation rates are, one cannot ignore the headline figure entirely. The headline figure reflects the sum of all inflation types. What's the point of bringing service sector inflation close to the target if other types of inflation fall to zero? Then, it would take considerable time to stimulate inflation again, which all central banks dealt with before the pandemic.

Therefore, we believe that the pound will correct itself soon. It is unlikely to correct too much. If the pair rises above the 1.3150 level (for example), it will likely mean the market still engages in baseless buying. Or perhaps it's now anticipating a future with Kamala Harris. Either way, the plan for the coming weeks is correction and a resumption of the downtrend that has just begun. In our view, the BoE will start cutting rates at each of its upcoming meetings, which the market likely did not fully anticipate.

The average volatility of the GBP/USD pair over the last five trading days is 62 pips, considered "average" for the pound/dollar pair. Therefore, on Friday, October 18, we expect movement within a range bounded by the levels 1.2947 and 1.3071. The higher linear regression channel is pointing upward, signaling the continuation of the upward trend. The CCI indicator formed six bearish divergences before any significant decline began. Recently, the indicator entered the oversold area and formed bullish divergences, indicating a potential upward correction.

Nearest support levels:

S1 – 1.3000
S2 – 1.2939
S3 – 1.2878

Nearest resistance levels:

R1 – 1.3062
R2 – 1.3123
R3 – 1.3184

Trading Recommendations:

The GBP/USD currency pair continues its substantial decline. We still do not consider long positions, as we believe that all factors favoring the British currency have already been priced in by the market multiple times. If you are trading based purely on "technical analysis," long positions are possible with targets of 1.3184 and 1.3245 if the price moves above the moving average line. Short positions are currently much more relevant, with targets at 1.2947 and 1.2939. The price is ignoring all oversold signals and bullish divergences, which do not guarantee an immediate start of a rise.

Explanations for Illustrations:

Linear Regression Channels: Help determine the current trend. If both are pointing in the same direction, it means the trend is strong.

Moving Average Line (20,0, smoothed): Defines the short-term trend and the direction in which trading should be conducted.

Murray Levels: Target levels for movements and corrections.

Volatility Levels (red lines): The likely price range in which the pair will trade over the next 24 hours, based on current volatility readings.

CCI Indicator: Entry into the oversold area (below -250) or overbought area (above +250) indicates an impending trend reversal in the opposite direction.

The material has been provided by InstaForex Company - www.instaforex.com #

Overview of EUR/USD on October 18; Rates Lowered, No More Bets

The EUR/USD currency pair traded in both directions on Thursday, but the downward bias persisted after three weeks of declines. It's been so long since the euro has fallen for three consecutive weeks that we can hardly remember the last time this happened. However, we've repeatedly highlighted the euro's overvaluation and unjustified high price, so the decline was expected.

Now, a correction seems in order—not because of any strong fundamental or macroeconomic reasons, but rather because it would fit a textbook scenario. However, the market often deviates from textbook patterns, and it wouldn't surprise us if, this time, there is no correction either. On what grounds should it happen—just because it would look nice?

Yesterday, the European Central Bank (ECB) lowered all three key interest rates by 0.25%. This decision was anticipated, as members of the ECB's monetary committee had hinted at an October rate cut for the past two weeks. What remained uncertain was whether the ECB planned another cut in December. In our view, it will. It doesn't matter much what Christine Lagarde's current stance is. There's still a month and a half until the December meeting. New reports on GDP, inflation, wages, and business activity will be released during this time. These reports could influence the ECB's current plans, which may change accordingly. Just two weeks ago, no one expected a rate cut in October. The ECB has set a certain pace for easing its monetary policy—once every two meetings. Thus, the cut in October can be seen as "ahead of schedule."

We would even argue that the inflation report for the Eurozone in September released a few hours before the ECB's announcement, was more significant. Although it was the second estimate of the figure, it differed from the first, which is quite rare. The Consumer Price Index slowed to 1.7% instead of the previously expected 1.8%. Core inflation came in at 2.7%, close to the target level. Meanwhile, the deposit rate (considered the primary rate in the EU) was reduced to 3.25%. Given that the neutral rate is 2.00-2.50%, the ECB still has some work to do.

Work is needed because the pace of economic growth has been disappointing for the past two years. If inflation is steadily decreasing, why continue to restrain an economy that is already on the brink of recession? We believe that the ECB will cut rates again in December. The euro is likely to continue its decline since the market has been pricing in the Fed's monetary policy easing "in advance" for the past two years.

The average volatility of the EUR/USD currency pair over the last five trading days as of October 18 is 44 pips, characterized as "low." We expect the pair to move between the levels of 1.0781 and 1.0869 on Friday. The higher linear regression channel is directed upward, but the overall downward trend remains. After several visits to the overbought area, the CCI indicator entered the oversold area and formed two bullish divergences, indicating that a potential correction was brewing.

Nearest support levels:

S1 – 1.0803
S2 – 1.0742
S3 – 1.0681

Nearest resistance levels:

R1 – 1.0864
R2 – 1.0925
R3 – 1.0986

Trading Recommendations:

The EUR/USD pair continues its downward movement. In recent weeks, we have indicated that we expect only a decline in the euro in the medium term, so we fully support the current downward direction. The market may have priced in all or nearly all future Fed rate cuts. If that's the case, the dollar has no further reasons to fall, though there were a few reasons. Short positions can still be considered with targets at 1.0803 and 1.0781. If you trade using "pure" technical analysis, long positions will be relevant when the price is above the moving average line. However, such a position would only signify a correction in the near future.

Explanations for Illustrations:

Linear Regression Channels: Help determine the current trend. If both are pointing in the same direction, it means the trend is strong.

Moving Average Line (20,0, smoothed): Defines the short-term trend and the direction in which trading should be conducted.

Murray Levels: Target levels for movements and corrections.

Volatility Levels (red lines): The likely price range in which the pair will trade over the next 24 hours, based on current volatility readings.

CCI Indicator: Entry into the oversold area (below -250) or overbought area (above +250) indicates an impending trend reversal in the opposite direction.

The material has been provided by InstaForex Company - www.instaforex.com #

Trading Recommendations and Analysis of EUR/USD on October 18. Christine Lagarde Didn't Save the Euro

Analysis of EUR/USD 5M

The EUR/USD currency pair continues its near-freefall decline. Yesterday, the European Central Bank meeting took place, where the decision was made to lower all three key rates by 0.25%. This was unsurprising to the market, as it had anticipated such a decision. Nevertheless, this provided a solid reason for the euro to fall again. It's worth noting that the market often prices in events it already knows about in advance. ECB representatives started discussing the possibility of a rate cut in October about two weeks ago. So why did the euro continue to fall today?

It has been falling for the past three weeks for the same reason. The market had been pricing in the Federal Reserve's monetary easing for two years and eventually fully priced it in. With the U.S. policy easing fully accounted for, no more factors are pushing the dollar down. Monetary policy has little to do with it. The market has long understood that the ECB would lower rates just as the Fed did. There was simply no other option.

Thus, the euro continues its decline and can move downward calmly, as we have been saying throughout 2024. Christine Lagarde hinted that another rate cut might occur in December, given the weak economic growth in the Eurozone. Therefore, the euro received further grounds for sustained decline. The target of 1.0463, which we have discussed all year, no longer seems far-fetched.

On Thursday, two trading signals formed around the 1.0836 level. The first signal wasn't feasible to act on and didn't make sense, as it appeared right after the ECB meeting. The second—rebound from the 1.0836 level—could have been used for a short position, but volatility remained low even today. The euro is falling in the same style it rose for more than a year—gradually, without rushing, and steadily every day.

COT Report:

The latest COT report is dated October 1. As shown in the illustration, the net position of non-commercial traders has long been in the bullish zone. The bears' attempt to gain dominance failed spectacularly. The net position of non-commercial traders (red line) decreased in the second half of 2023 and early 2024, while commercial traders' (blue line) positions were growing. At the moment, professional traders are once again increasing their long positions.

We still don't see any fundamental factors supporting the strengthening of the euro, and technical analysis shows that the price remains in a consolidation zone or flat. On the weekly time frame, it's evident that since December 2022, the pair has been trading between levels 1.0448 and 1.1274. In other words, we have moved from a seven-month flat into an 18-month flat.

The red and blue lines are diverging, indicating an increase in long positions on the euro. However, within the context of a flat, such changes cannot form the basis for long-term conclusions. In the most recent reporting week, long positions for the non-commercial group decreased by 9,500, while short positions increased by 6,800. Accordingly, the net position fell by 16,300. The potential for a decline in the euro remains strong.

Analysis of EUR/USD 1H

In the hourly time frame, the pair continues its downward movement, which could be the beginning of a new, prolonged downtrend. There's no point in discussing the fundamental and macroeconomic reasons for a potential new decline in the dollar—they simply don't exist. In the medium-term perspective, we expect nothing but a decline. In the short term, a correction is possible, but it would require at least a consolidation above the trendline.

For October 18, we highlight the following trading levels—1.0658-1.0669, 1.0757, 1.0797, 1.0843, 1.0889, 1.0935, 1.1006, 1.1092, 1.1147, 1.1185, 1.1234, 1.1274, as well as the Senkou Span B line (1.0992) and the Kijun-sen line (1.0881). The Ichimoku indicator lines may shift throughout the day, so this should be considered when determining trading signals. Remember to set a Stop Loss to break even if the price moves 15 pips in the intended direction. This helps protect against potential losses if the signal turns out to be false.

No significant events are scheduled in the Eurozone on Friday. In the U.S., only two minor reports are expected, which is unlikely to affect the overall trend. As a result, the euro may also continue its gradual decline today.

Explanation of Illustrations:

Support and Resistance Levels: Thick red lines near which price movement may end. They are not sources of trading signals.

Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines transferred to the hourly time frame from the 4-hour chart. They are strong lines.

Extremes Levels: Thin red lines from which the price has previously bounced. They serve as sources of trading signals.

Yellow Lines: Trend lines, trend channels, and any other technical patterns.

Indicator 1 on COT charts: The size of the net position for each category of traders.

The material has been provided by InstaForex Company - www.instaforex.com #

Trading Recommendations and Analysis of GBP/USD on October 17. Inflation Creates Additional Challenges for the Pound

Analysis of GBP/USD 5M

The GBP/USD currency pair sustained its decline on Tuesday without even attempting to start a correction. Yesterday, the UK released its inflation report for September, and all the figures came in below forecasts. What does this mean? Simply put, inflation is falling faster than Andrew Bailey feared. Moreover, the core inflation rate is now at 1.7%. We previously mentioned that the Bank of England might be concerned about core inflation and inflation in the services sector. However, the central bank cannot ignore the drop in headline inflation. If the BoE waits for problem areas of inflation to decrease by another 1.0–1.5%, headline inflation, and inflation in the manufacturing sector could reach zero or even negative levels. And how do you balance all types of inflation, then?

We believe the BoE needs to lower rates as quickly as possible, perhaps even in 0.5% steps. It seems the market also understands this, having long praised the resilience of the British economy during challenging monetary times. However, the UK economy has grown only for appearance's sake, and inflation is rapidly approaching zero. It looks like the BoE has delayed easing monetary policy as well. So, the fact that the pound is falling doesn't surprise us. We believe that the fair value of the pound against the U.S. dollar is around $1.20.

Yesterday, two trading signals were formed in the 5-minute time frame. First, the pair broke below the Kijun-sen line and the 1.3050 level, though technically, this signal was complex to capitalize on. The pound should have been sold immediately after the inflation report was released, as it didn't suggest any other course of action. Later, the price bounced off the 1.2981-1.2987 area, allowing for long positions to be opened. Both trades ended in profit.

COT Report:

The COT (Commitment of Traders) reports for the British pound show that commercial traders' sentiment has been constantly changing over recent years. The red and blue lines, representing the net positions of commercial and non-commercial traders, frequently cross and are primarily near the zero mark. We also see that the latest downward trend occurred when the red line was below the zero mark. The red line is above zero, and the price has broken through the important 1.3154 level.

According to the latest COT report on the British pound, the non-commercial group opened 6,100 new BUY contracts and closed 600 SELL contracts. As a result, the net position of non-commercial traders increased by 6,700 contracts over the week. The British pound continues to be bought up by market participants...

The fundamental backdrop still does not justify long-term purchases of the British pound, and the currency has a real chance of resuming a global downward trend. However, on the weekly time frame, we have an ascending trend line, so until it is broken, we cannot expect a long-term decline in the pound. The pound has been rising despite almost everything, and even when COT reports show that large players are selling it, it still rises.

Analysis of GBP/USD 1H

The GBP/USD pair continues to decline in the hourly time frame. The upward trend has been canceled, and now only a significant and prolonged fall of the British currency should be expected. Of course, the market might resume unjustified purchases of the British pound, but let's reiterate—there are no fundamental or macroeconomic reasons for such actions. Therefore, we continue to support the downward movement, but the pair may correct upward in the near future. For this to happen, the price must at least consolidate above the trendline.

For October 17, we highlight the following important levels: 1.2796-1.2816, 1.2863, 1.2981-1.2987, 1.3050, 1.3119, 1.3175, 1.3222, 1.3273, 1.3367, and 1.3439. The Senkou Span B line (1.3205) and the Kijun-sen line (1.3040) can also serve as signal sources. It is recommended to place the Stop Loss at break even when the price moves 20 pips in the intended direction. The Ichimoku indicator lines may shift throughout the day, so this should be considered when determining trading signals.

No important reports are scheduled in the UK on Wednesday, while three minor reports will be released in the US. Industrial production and retail sales can be given attention, but these data are unlikely to provoke a strong market reaction.

Explanation of Illustrations:

Support and Resistance Levels: Thick red lines near which price movement may end. They are not sources of trading signals.

Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines transferred to the hourly time frame from the 4-hour chart. They are strong lines.

Extremes Levels: Thin red lines from which the price has previously bounced. They serve as sources of trading signals.

Yellow Lines: Trend lines, trend channels, and any other technical patterns.

Indicator 1 on COT charts: The size of the net position for each category of traders.

The material has been provided by InstaForex Company - www.instaforex.com #

Trading Recommendations and Analysis of EUR/USD on October 17. The Euro Sees No Reason to Stop

Analysis of EUR/USD 5M

On Tuesday, the EUR/USD currency pair continued its near-freefall. We believe the nature of the current movement is very symbolic and accurately reflects the market sentiment. What does this daily decline in the euro mean? It signifies that market participants are selling the euro daily. Essentially, the euro is being sold for any reason, or no reason at all, just as the U.S. dollar was previously discarded. We repeatedly warned that the euro was overbought and unjustifiably expensive. We also warned that buying the euro simply because everyone else was doing it was illogical. We mentioned that there would come a time when the euro would fall daily, just as it had previously risen. Furthermore, we pointed out that the decline in the euro could start after September 18, when the Federal Reserve officially began its monetary easing. This is because the market had been pricing in the future rate cut from the Fed for two years, and once it started, there were no further factors to sell the dollar.

Thus, we now witness the daily decline of the euro, which could continue for a long time. Today, the European Central Bank will announce the results of its meeting, and no one doubts that rates will be cut for the third consecutive time, which means more aggressive easing than the Fed. However, the market had only been pricing in the Fed's rate cuts! Now, it must account for the ECB's cuts, which had been lower throughout the hawkish cycle.

Despite the pair's daily decline, it's challenging to capitalize on these moves in lower time frames due to low volatility. Therefore, trades must be held for several days or executed in higher time frames. The current movements are too weak for intraday trading. Most of the day is spent in a flat range, followed by a downward course for several hours.

COT Report:

Analysis of EUR/USD 1H

The pair continues its downward movement on the hourly time frame, which may begin a new long-term bearish trend. There's no point in discussing fundamental or macroeconomic reasons for a possible new dollar decline — they don't exist. In the medium term, we expect nothing but further decline. In the short term, a correction is possible, but for this to happen, the price needs to consolidate above the trend line.

For October 17, we highlight the following trading levels — 1.0658-1.0669, 1.0757, 1.0797, 1.0843, 1.0889, 1.0935, 1.1006, 1.1092, 1.1147, 1.1185, 1.1234, and also the Senkou Span B line (1.1083) and the Kijun-sen line (1.0942). The Ichimoku indicator lines may shift throughout the day, which should be considered when identifying trading signals. Don't forget to set a Stop Loss order to break even if the price moves 15 pips in the intended direction. This protects against potential losses if the signal turns out to be false.

The ECB meeting results will be announced on Wednesday, and a press conference with Christine Lagarde will follow. This is the day's most important event, and the future of the euro will depend on Lagarde's statements. In the U.S., less significant reports on retail sales, industrial production, and jobless claims will be published.

Explanation of Illustrations:

Support and Resistance Levels: Thick red lines near which price movement may end. They are not sources of trading signals.

Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines transferred to the hourly time frame from the 4-hour chart. They are strong lines.

Extremes Levels: Thin red lines from which the price has previously bounced. They serve as sources of trading signals.

Yellow Lines: Trend lines, trend channels, and any other technical patterns.

Indicator 1 on COT charts: The size of the net position for each category of traders.

The material has been provided by InstaForex Company - www.instaforex.com #

Forecast for EUR/USD on October 16, 2024

On Tuesday, following the record high set by the S&P 500 stock index on Monday, there was a pullback of 0.76%. Oil prices dropped by 3.75%, and 5-year U.S. Treasury bonds yield decreased to 3.85%. Against this backdrop, the euro naturally fell by 15 pips, with the lower shadow testing the target support level of 1.0882. It seems that the spectacular speculative reversal we anticipated around the European Central Bank meeting for over a week may not happen. However, at the same time, the likelihood of a stock market crash, which could pull everything else down with it, has significantly increased. The first large, obvious target for the S&P 500 appears to be at 5392, corresponding to the low of July 25, close to the September low, and coinciding with a 61.8% correction from the August 5 rally (-7.3%).

On the daily chart, if the euro consolidates below the 1.0882 level, the target of 1.0777 (the August 1 low) will open up. This plan, however, needs to be supported by tomorrow's ECB meeting. If, as business media reports, the market has already priced in a 0.25% rate cut, there may be a slight upward correction, but after that, we expect the euro to continue falling.

On the four-hour chart, the Marlin oscillator has established a short-term downtrend in negative territory. The price is steadily declining below both indicator lines. We are still determining how strongly the ECB's outcomes might disrupt this trend, but the market itself is only reinforcing this downward tendency day by day.

The material has been provided by InstaForex Company - www.instaforex.com #