EURUSD ANALYSIS & TRADE RECOMMENDATION FOR 18TH TO 22ND OCTOBER
Updated
Hello, traders. Our EURUSD analysis was as predicted last week as the price completed its Double Bottom formation to the upside. This week we will look at the situation of the EURUSD, fundamental and technical analysis, bull and bear sentiments, and likely direction of the pair for this week, and, most importantly, look for good short/long-term trade.
The fiber might be less volatile on Monday and Tuesday, as there is no high impact news. The volatility of the pair will increase from Wednesday to Friday because of incoming high impact news. We expect the US monthly Industrial Productions on Monday, October 18, US crude oil Inventories on Wednesday, October 20, US Fed Manufacturing Index and US unemployment claims on Thursday, October 21. There will be a lot of high impact news on Friday as we expect the US, France and Germany to release Flash Manufacturing PMI and Flash Service PMI, as well as the US Treasury current report. The EURUSD directions will be highly influenced by these economic data.
On technical analysis, the overall direction of the pair still remains bearish.
On the monthly timeframe, the price seems to be retesting the major support around 1.5200. This support was previously a major resistance broken on July 1, 2020. The support zone also seems to be in confluence with the lower trendline of the descending channel. Thus, the bulls will strongly defend this area, or it might take some time before the bears could break this stronghold at least. Take note that the recent candle might be a doji or bullish candle. It will be interesting to see how this candle closes. It is also noted that a double top pattern has been formed on this timeframe and bears have broken the neckline. The formation of these patterns might be completed before the resumption of bullish momentum. It seems both bulls and bears are cautious.
On the weekly timeframe, the double top formation is playing out well. The price might test the double top neckline (in confluence with the lower trendline of the descending channel) broken around 1.17205. If this level is tested and held, the price might further pull back to 1.12260. This is where we might look for short-term trade.
(Go to my medium analysis for images)
On the daily timeframe, the price seems to be respecting the downtrend channel. When the price challenges the lower trendline of the descending trendline, a bullish engulfing candle was formed, and the price went to the upside.
Go to my medium analysis for images)
Also, a regular bullish divergence seems to have formed on the daily timeframe, with the price forming a lower low and RSI and CCI forming a higher low. This means the price might begin to form higher highs after the 1.15255 recent lows.
[Go to my medium analysis for images)
The price seems to be stalling after 5 bearish candles. The recent candle close was bullish. This could mean there is an equilibrium in supply and demand around this region. The price might consolidate for some time as a lot of indecision candles might be formed. The bears might also be exhausted as the bull might be gaining momentum (remember this is a strong demand zone, more bearish momentum will be needed to break this zone).
On the H4 chart, price is also respecting the 100 EMA as well as the minor support at 1.15750 (where a short-term long position can be taken).
Go to my medium analysis for images)
A bullish divergence on the H4 TF was also formed, indicating the price will most likely go to the upside.
Go to my medium analysis for images)
A short-term long position can be taken this week. Entries can be taken around 1.15752 if candle forms any reversal signal (such as doji or bullish engulfing), with SL placed around 1.15200 and TP around 1.17200. This is a good trade with 2.6 RR.
Go to my medium analysis for images)
Alternatively, conservative or cautious traders can enter after the break of the 100 EMA and the upper trendline (around 1.16184) with SL placed at 1.15752 and the same level for TP. The RR is 2.4 making both trades a good one.
Go to my medium analysis for images)
A short position can also be taken if price breaks and close below the 1.15752 with TP placed at the 1.15200 and SL around 1.16034.
Go to my medium analysis for images)
The 1.157 region must be closely watched.
this analysis pictures and images can be seen on my medium articles. I cant share links
Disclaimer: Trading forex involves high risk, and is not suitable for all investors. Before deciding to trade forex, you should consider your investment objectives, level of experience, and risk appetite. The author is not liable for any loss of investment or capital during trading.
The fiber might be less volatile on Monday and Tuesday, as there is no high impact news. The volatility of the pair will increase from Wednesday to Friday because of incoming high impact news. We expect the US monthly Industrial Productions on Monday, October 18, US crude oil Inventories on Wednesday, October 20, US Fed Manufacturing Index and US unemployment claims on Thursday, October 21. There will be a lot of high impact news on Friday as we expect the US, France and Germany to release Flash Manufacturing PMI and Flash Service PMI, as well as the US Treasury current report. The EURUSD directions will be highly influenced by these economic data.
On technical analysis, the overall direction of the pair still remains bearish.
On the monthly timeframe, the price seems to be retesting the major support around 1.5200. This support was previously a major resistance broken on July 1, 2020. The support zone also seems to be in confluence with the lower trendline of the descending channel. Thus, the bulls will strongly defend this area, or it might take some time before the bears could break this stronghold at least. Take note that the recent candle might be a doji or bullish candle. It will be interesting to see how this candle closes. It is also noted that a double top pattern has been formed on this timeframe and bears have broken the neckline. The formation of these patterns might be completed before the resumption of bullish momentum. It seems both bulls and bears are cautious.
On the weekly timeframe, the double top formation is playing out well. The price might test the double top neckline (in confluence with the lower trendline of the descending channel) broken around 1.17205. If this level is tested and held, the price might further pull back to 1.12260. This is where we might look for short-term trade.
(Go to my medium analysis for images)
On the daily timeframe, the price seems to be respecting the downtrend channel. When the price challenges the lower trendline of the descending trendline, a bullish engulfing candle was formed, and the price went to the upside.
Go to my medium analysis for images)
Also, a regular bullish divergence seems to have formed on the daily timeframe, with the price forming a lower low and RSI and CCI forming a higher low. This means the price might begin to form higher highs after the 1.15255 recent lows.
[Go to my medium analysis for images)
The price seems to be stalling after 5 bearish candles. The recent candle close was bullish. This could mean there is an equilibrium in supply and demand around this region. The price might consolidate for some time as a lot of indecision candles might be formed. The bears might also be exhausted as the bull might be gaining momentum (remember this is a strong demand zone, more bearish momentum will be needed to break this zone).
On the H4 chart, price is also respecting the 100 EMA as well as the minor support at 1.15750 (where a short-term long position can be taken).
Go to my medium analysis for images)
A bullish divergence on the H4 TF was also formed, indicating the price will most likely go to the upside.
Go to my medium analysis for images)
A short-term long position can be taken this week. Entries can be taken around 1.15752 if candle forms any reversal signal (such as doji or bullish engulfing), with SL placed around 1.15200 and TP around 1.17200. This is a good trade with 2.6 RR.
Go to my medium analysis for images)
Alternatively, conservative or cautious traders can enter after the break of the 100 EMA and the upper trendline (around 1.16184) with SL placed at 1.15752 and the same level for TP. The RR is 2.4 making both trades a good one.
Go to my medium analysis for images)
A short position can also be taken if price breaks and close below the 1.15752 with TP placed at the 1.15200 and SL around 1.16034.
Go to my medium analysis for images)
The 1.157 region must be closely watched.
this analysis pictures and images can be seen on my medium articles. I cant share links
Disclaimer: Trading forex involves high risk, and is not suitable for all investors. Before deciding to trade forex, you should consider your investment objectives, level of experience, and risk appetite. The author is not liable for any loss of investment or capital during trading.
Trade active
Trade active
Our EURUSD active trade is on profit of 70 pips as price is at 1.65 region. We will now move our SL higher to the next support level at 1.5750
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