Low activity in the market remains due to fast approaching US presidential election

The currency market is in a state of collapse amid investors' lack of interest, while the main events in the global stock market and commodity markets take place in Europe and the US.

It was repeatedly mentioned that market players are focusing their attention on the stock markets and commodity markets, which is related to investors' rising fears that the second wave of pandemic will lead not only to limited economic activity in European countries such as France and Germany, but also in the United States. The authorities of the indicated European countries have already reported the new restriction measures, while in the US, the focus is still on the result of the presidential elections, which will take place on November 3.

The lack of direct influence on the currency market led to its extremely low interest. Although they exist – Central banks' decision on monetary policy, such as BoJ's desire to keep it unchanged, ECB's head, Ms. Lagarde's speech yesterday, and more, these important economic data are still ignored by the market who fully focus their attention on the second wave of COVID-19 and its consequences on the economy of the world and individual countries. What also interests them is still the topic of the US presidential election, that is full of uncertainty.

If the pandemic is an unregulated process, then the elections are completely in its power and will have a strong impact not only on the entire Western world. The dependent Americans around the world are waiting to see who will come to power, what will be the US policy, including economic, and whether the new stimulus measures promised earlier will be taken or not. Investors have a lot of questions to which there are practically no answers until November 3.

In terms of global difficulties, there is still a continuing demand for defensive assets, primarily US government bonds, including the Japanese yen and the dollar. The dynamics of the main currency pair accurately shows investor sentiment and their attitude towards risky assets, which remains negative for the time being.

Assessing the overall dynamics in the currency markets, we believe that it will continue until this week ends. Major currency pairs are unlikely to move significantly, but emerging market currencies will remain under great pressure.

Forecast of the day:

The EUR/USD pair is consolidating above the level of 1.1750 after it declined. If the mood of the market slightly improves today, it may try to recover to 1.1800.

The USD/CAD pair is trying to decline on the wave of some recovery in crude oil prices. If this process does not stop today, a local decline to the level of 1.3240 can be expected.

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Technical Analysis of EUR/USD for October 29, 2020

Technical Market Outlook:

The bearish pressure intensify on the EUR/USD as the market makes a new local low at the level of 1.1718 and breaks below the key short-term Fibonacci retracement seen at the level of 1.1761. The bounce from the target level at 1.1724 was shallow and was capped around the level of 1.1759 (lower channel line resistance). Weak and negative momentum supports short-term bearish outlook despite the oversold market conditions. The next target for bears is seen at the level of 1.1710 and 1.1696.

Weekly Pivot Points:

WR3 - 1.2123

WR2 - 1.1991

WR1 - 1.1943

Weekly Pivot - 1.1823

WS1 - 1.1766

WS2 - 1.1638

WS3 - 1.1589

Trading Recommendations:

Since the middle of March 2020 the main trend is on EUR/USD pair has been up, which can be confirmed by almost 10 weekly up candles on the weekly time frame chart and 4 monthly up candles on the monthly time frame chart. The recent correction towards the level of 1.1612 seems to be completed and now market is ready for another wave up. This means any local corrections should be used to buy the dips until the key technical support is broken. The key long-term technical support is seen at the level of 1.1445. The key long-term technical resistance is seen at the level of 1.2555.

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Indicator analysis. Daily review on EUR/USD for October 29, 2020

The pair resumed its downward movement yesterday. While moving down, the price broke through the support line - 1.1750 (white bold line) and tested the pullback level of 61.8% - 1.1715 (red dotted line). As per the economic calendar, euro news is expected at 08.55, 12.45, and 13.30 UTC, while dollar news is expected at 12.30 and 14.00 UTC. It is possible to recoil the work upwards.

Trend analysis (Fig. 1).

Today, the market may start moving up from the level of 1.1745 (closing of yesterday's daily candlestick) with the goal of 1.1807, which is a pullback level of 50.0% (blue dotted line). When testing this level, further work up with the goal of 1.1853, which is a pullback level of 61.8% (blue dotted line). Much will depend on the news (12:45 and 13:30 UTC).

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Figure 1 (Daily chart)

Comprehensive analysis:

  • Indicator analysis - up
  • Fibonacci levels - up
  • Volumes - down
  • Candlestick analysis - up
  • Trend analysis - up
  • Bollinger bands - down
  • Weekly chart - down

General conclusion:

Today, the market from the level of 1.1745 (closing of yesterday's daily candlestick) may begin moving up with the goal of 1.1807, which is a pullback level of 50.0% (blue dotted line). When testing this level, further work up with the goal of 1.1853, which is a pullback level of 61.8% (blue dotted line).

Alternative scenario: from the level of 1.1745 (closing of yesterday's daily candle), the price may start moving up with the target of 1.1757, which is the resistance line (white bold line). When testing this line, further work downward with the goal of 1.1715, which is a pullback level of 61.8% (red dotted line).

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Technical Analysis of ETH/USD for October 29, 2020

Crypto Industry Outlook:

Colombia now has the highest number of Bitomats in Latin America. According to CoinATMRadar, Bogota, the country's capital, has 34, followed by Medellin with 11, and Bucaramanga and Cali with 4. Other cities with at least one are Barranquilla, Cartagena, Cucuta, La Hormiga and Pereira.

Until recently, countries like Venezuela and Argentina were more frequently discussed as crypto hotspots in terms of regional adoption due to factors such as political and economic turmoil. Colombia, however, took important steps towards regulating the country's crypto realm, and its government approved a pilot program to test crypto transactions in September. The pilot, which runs in the recently established regulatory sandbox, will run until December 31.

In September, Colombia's Ministry of Information Technology and Communications, or MinTIC, published a draft of a guide urging the public sector to adopt blockchain technology, including crypto payments.

Data released in August by Statista showed that cryptocurrency adoption hit double-digit values in Brazil, Colombia, Argentina, Mexico and Chile.

Technical Market Outlook:

The ETH/USD pair has reversed the rally after the short-term trend line resistance had been hit around the level of $407.03. The bears took control over the market and push the price back under $400. Moreover, a new loacal low was made at the level of $379.74, which is below the 61% Fibonacci retracement of the lat wave up. The next target is seen at the level of $375.52 and $369.37. Weak and negative momentum supports the short-term bearish outlook.

Weekly Pivot Points:

WR3 - $490.39

WR2 - $455.51

WR1 - $435.03

Weekly Pivot - $398.88

WS1 - $379.21

WS2 - $342.87

WS3 - $323.39

Trading Recommendations:

The up trend on the Ethereum continues and the next long term target for ETH/USD is seen at the level of $500, so any correction or local pull-back should be used to open the buy orders. This scenario is valid as long as the level of $309.61 is broken.

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Technical Analysis of BTC/USD for October 29, 2020

Crypto Industry Outlook:

Bitcoin cannot function as an inclusive currency for those without banking services due to its volatility, Mastercard CEO Ajay Banga said at the Fortune Global Forum. He also pointed to a lack of knowledge about who is behind the cryptocurrency.

"I do not believe in volatility or, for that matter, a lack of transparency about who is involved in this currency. That's why we believe in central bank digital currencies."

Banga also revealed that Mastercard has a significant CBDC patent library, which may help explain why the company is so positive about them.

When asked about Bitcoin as a potential solution for financial inclusion, Banga stated that the cryptocurrency did not meet the requirements for people without access to banking services. He believes that if fiat currencies went digital, they would "help cross-border flows," but added that "the financial inclusion of individuals is a different matter." He has expressed a strong view on the opacity of cryptocurrencies for years, calling all non-government cryptocurrencies rubbish and even likening them to "snakes", saying that they do not "deserve" to be considered a medium of exchange.

In 2019, the company appeared to be taking a more open stance on cryptocurrencies, being one of the founding members of the Libra project. But last October, the payment provider left the project along with Visa, Stripe and Paypal, citing lack of transparency among the main reasons for its departure.

Technical Market Outlook:

The BTC/USD pair has made a Doji candlestick pattern, reversed from a new yearly high at the level of $13,778 and since then is trading in a horizontal trend, consolidating the recent gains. Please notice that the market is trading inside a channel as well. The local lows are shallow, so the bulls are still in control of this market. If the level of $13,698 is clearly violated, then the next target is seen at the level of $14,000. The key short-term technical support is seen at the level of $12,625 and as long as is not broken the odds for another wave up are high. The intraday supports are seen at the levels of $13,296 and $13,116.

Weekly Pivot Points:

WR3 - $15,886

WR2 - $14,555

WR1 - $13,946

Weekly Pivot - $12,537

WS1 - $11,955

WS2 - $10,713

WS3 - $10,093

Trading Recommendations:

Bitcoin is trading at the yearly highs and bulls are in control of the market. The up trend continues and the next long term target for Bitcoin is seen at the level of $14,000, so any correction or local pull-back should be used to open the buy orders. This scenario is valid as long as the level of $10,000 is broken.

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Elliott wave analysis of GBP/JPY for October 29, 2020

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Risk-off sentiment dominated the financial markets yesterday after many European countries announced new lock-downs in their efforts to curb the coronavirus. EUR weakened amid such news while JPY rose, which clearly was seen in yesterdays price-action. GBP/JPY broke a key support at 136.26 which called for more downside pressure towards 135.37 and 135.18. GBP/JPY did more than that and bottomed at the 61.8% corrective target of wave i/ at 134.86. After bottoming at 134.86, GBP/JPY grew significantly indicating a solid bottom could be in place and wave iii/ finally being in motion. To confirm this is the case, we need a break above resistance at 136.50.

Only a break below support at 135.24 will indicate that wave ii/ still is in motion and a new test of support at 134.86 should be expected, but the potential downside may be limited now.

R3: 136.50

R2: 136.17

R1: 135.92

Pivot: 135.79

S1: 135.61

S2: 135.24

S3: 134.86

Trading recommendation:

We took 50% profit off our short position from 136.20 at 135.45 and we will sell the final 50% here at 135.92 for an average of 135.69. We will re-buy GBP at 135.70 or upon a break above 136.55

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EUR / USD. Lockdown is not as bad as it is portrayed

The US Dollar index has again consolidated within the 93rd figure. Over the past two days, the indicator has gradually gained momentum, reacting to the growth of anti-risk sentiment in the foreign exchange market. But during the Asian session on Thursday, the index actually froze in place. The upward momentum faded, after which the major Dollar pairs fell flat. This includes the Euro-Dollar pair, which managed to stay within the 17th figure. Now buyers of the EUR/USD pair are making weak attempts to correct growth, although they clearly do not have enough strength. However, the greenback's failure to develop a large-scale offensive serves as a wake-up call for Dollar bulls. The strength of the Dollar is the Coronavirus factor, the power of which may run out in the very near future.

It is worth recalling the classic principle of the currency market to "buy on rumors, sell on facts". Rumors that key European countries are preparing to tighten quarantine restrictions were circulating last week, when there was a widespread increase in the number of infections. In the forefront of events was France, which imposed a curfew (at night) in the country's largest cities. Similar measures were taken in the Czech Republic and the Netherlands.

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The rate of spread of COVID-19 increased so this week, the market again started talking about the introduction of a full lockdown in the EU countries. Against the background of such rumors, the truth of which was supported by medical reports and comments from some politicians, the Dollar began to gain momentum. The greenback has regained its status as the main defensive asset, even despite its own array of problems related to the political election in the United States. But the fear of a lockdown was stronger so the dollar index soared up and the price of EUR/USD, respectively, collapsed to the base of the 17th figure.

Germany and France decided on further steps to counter the spread of the epidemic. It turned out that Berlin decided to introduce the so-called "soft lockdown", which will be in effect throughout November. During this time, all leisure businesses will be closed (theaters, cinemas, fitness clubs, swimming pools, casinos, and so on). Almost all service-based businesses (beauty, tattoo and massage parlors) will also be closed. In addition, restaurants and cafes will be closed in November-- with the exception of those that sell takeaway food. All sports competitions will be held without spectators. In general, citizens were ordered to limit social contacts outside their homes to the absolute minimum. At the same time, industrial enterprises, wholesale, and retail trade enterprises (although with restrictions on occupancy), as well as schools and kindergartens continue to operate in the country.

As for France, they decided to return to the regulation of self-isolation. Mass events will be canceled, while gathering in places like restaurants and bars will be prohibited. There is no question of a full lockdown. Restrictions mainly apply to service companies.

Spain and Italy increased the quarantine restrictions but did not decide on a full lockdown. In Italy, all cafes, restaurants, cinemas, and gyms were closed. So far, these restrictions have been going on for two weeks. Spain has so far only imposed a night curfew (except for the Canary Islands).

Discussing the possible consequences of the second wave of the pandemic, many experts said that Europe and the United States could repeat the events that happened last spring. However, in my opinion, the current reaction of the authorities differs from the reaction of six months ago.

Firstly, major European countries do not decide on a comprehensive lockdown. The measures taken are softer, more local in nature. Second, at the beginning of this year, no one knew how long the lockdown would last. To date, it is known that several weeks of strict restrictions are needed to extinguish the wave of morbidity (an example of this is the Australian state of Victoria, where the incidence dropped to zero after a five-week quarantine). That is why the Germans announced the end date of the soft lockdown: November 30. The French, Spanish and Italians also agreed to discuss the feasibility of quarantine restrictions every two weeks.

Lastly, society's response to increased restrictions is now more severe. In particular, in Italy, clashes between protesters and the police have been going on for several days. In the Czech Republic, Great Britain, and Germany, large-scale protests are being held against the strengthening of quarantine. This nuance should also be taken into account when assessing the prospects for increasing lockdown in Europe.

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The panic over the possibility of total lockdown throughout Europe is likely to subside due to the obvious discrepancy with the real steps of the authorities. Of course, even a soft lockdown will negatively affect the European economy but in my opinion, the previous market reaction was exaggerated. All this suggests that the Coronavirus factor will take a back seat in the medium term. The Euro will focus on the results of the October meeting of the ECB. The US Dollar is being affected by the political climate of the country and discussion of a new stimulus package. In my opinion, long positions are still relevant for the pair in the medium term (until next Tuesday, November 3). The likelihood of a prolonged period of political uncertainty will put pressure on the greenback, which may actively lose its positions on the eve of the election. Considering the goals of corrective growth, we can identify two positions: 1.1790 (the upper boundary of the Kumo cloud, which coincides with the Bollinger Bands and Tenkan-sen line on the daily chart) and 1.1860. This is the upper line of the Bollinger Bands on the same timeframe.

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Elliott wave analysis of EUR/JPY for October 29, 2020

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Risk-off sentiment dominated the financial markets yesterday after many European countires announced new lock-downs in their efforts to curb the spread of the coronavirus. EUR weakened amid such news while JPY gained momentum, which clearly was seen in yesterdays price-action. EUR/JPY broke key-support at 123.38 and declined to a low of 122.15 which is the 61.8% corrective target of wave 1/. The low of wave 2/ and be the tne very early stages of a new stong impulsive rally in wave 3/ towards 129.86.

A retest and maybe even a slight break below support at 122.15 can't be excluded before wave 2/ finally completes and wave 3/ is ready to take over.

R3: 123.49

R2: 123.17

R1: 122.89

Pivot: 122.64

S1: 122.48

S2: 122.25

S3: 122.15

Trading recommendation:

We will buy EUR at 122.25 or upon a break above 122.95. If our buy order at 122.25 is filled, we will place our stop at 121.75.

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Trading plan for USDX for October 29, 2020

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Technical outlook:

The US dollar index broke above 93.12 and rallied through the 93.65 level before pulling back. The index is seen to be trading around the 93.38 level at this point in writing and is expected to continue pushing higher after a shallow pullback. Immediate resistance is seen at 93.90 followed by 94.75, while support is seen around 92.50 followed by 91.75 respectively. A break above the 93.90/94.00 levels would confirm that bulls are back in control and here to stay for longer. The US dollar index seems to be poised to push towards 96.00 in the next several weeks, provided prices stay above a 91.75 low. Also note that US dollar index had bounced off just below the Fibonacci 0.618 retracement of entire rally between 91.75 and 94.75 respectively. Ideally, prices should push through 96.00 and 98.00.

Trading plan:

Remain long, stop @ 91.75, target @ 96.00.

Good luck!

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Trading plan for GBPUSD for October 29, 2020

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Technical outlook:

GBPUSD reversed sharply lower yesterday and hit 1.2916 lows before puling back higher. The Cable currency pair is seen to be trading around 1.3000 levels at this point in writing and is expected to continue lower towards 1.2200 levels in the next few weeks. Immediate resistance is seen through 1.3488 while interim support is around 1.2860, followed by 1.2675 levels respectively. A break below 1.2675 will accelerate lower and also confirm that a meaningful top is in place around 1.3175 levels. Furthermore also note that 1.3175 is the fibonacci 0.618 retracement of the recent drop between 1.3488 and 1.2675 respectively. High probability remains for a continued push lower with 1.3175 intact, going forward. The earlier rally between 1.1414 and 1.3488 is being retraced for now and GBPUSD is expected to drop towards fibonacci 0.618 levels around 1.2200. Bulls are expected to resume rally thereafter.

Trading plan:

Remain short, stop at 1.3500, target is 1.2200

Good luck!

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Trading plan for EURUSD for October 29, 2020

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Technical outlook:

EURUSD reversed lower yesterday and print lows at 1.1717 levels before pulling back. The single currency is seen to be trading around 1.1752 levels at this point in writing and is expected to continue drifting lower. Immediate resistance stays around 1.1915, followed by 1.2010; while support comes at 1.1690, followed by 1.1610 levels respectively. Please note that EURUSD had earlier tested the fibonacci 0.618 retracement of the entire drop between 1.2010 and 1.1610 levels respectively. After finding resistance around 1.1880, it has been in control of bears and is expected to break below 1.1610 interim support in the next few trading sessions. The overall structure remains bearish in the medium term, until prices stay below 1.2010 resistance. EURUSD is expected to drop through 1.1150 levels, which is also fibonacci 0.618 support of the entire rally between 1.0636 and 1.2010 levels respectively.

Trading plan:

Remain short, stop at 1.2010, target is 1.1150

Good luck!

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Brief trading recommendations for EUR/USD on 10/29/20

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Yesterday, the EUR/USD pair held the downward tact set by the market earlier. As a result, the quote overcame the variable benchmark of 1.1760 and headed towards the main support level of 1.1700, which reflects the area of 1.1690/1.1710.

The current downward interest comes from a number of technical and fundamental factors:

First, technical analysis considers the recovery process, relative to the four-week growth of 1.1612 - - - > 1.1880, where sellers have already recovered about 59% of the total scale.

Meanwhile, the fundamental analysis comes from the information background regarding the second wave of COVID-19, where news about the tightening of quarantine measures in Europe puts pressure on the European currency.

In regards with the quotes' current location, a slight pull back towards the level of 1.1760 can be observed, where there was another slowdown.

We can assume that if the price is consolidated below the level of 1.1730, there will be another flow of sellers, which will lead the quote to the area 1.1690//1.1700//1.1710.

The sellers' greatest activity will occur after the price consolidates below the level of 1.1690, which will lead to the next recovery stage, that is, towards 1.1650-1.1615.

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GBP/USD: plan for the European session on October 29. COT reports. Pound buyers losing their nerves, no positive news on

To open long positions on GBP/USD, you need:

The British pound showed its best side yesterday. It was not possible to earn money and wait for a signal to open short positions in the morning. The same cannot be said for the afternoon, where a great long entry point was formed. Let's take a look at the 5-minute chart and break it down. If you read yesterday's afternoon review, you will see that I advised you to open long positions immediately on a rebound from support at 1.2919, which is what happened. After the very first test of this level, the pound turned around and rushed back up to the resistance of 1.2997, allowing it to take more than 80 points of profit from the market.

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Now for the buyers and today's technical picture. The lack of Brexit news seems to put pressure on the bulls, and as long as the situation remains uncertain, the more likely it is for no compromise between the parties. All that buyers of the pound can expect now is to return resistance at 1.2997, since being able to settle above this level will lead to a buy signal that can return GBP/USD to the resistance area of 1.3058, where I recommend taking profits. A high of 1.3120 will be the next goal, but it will only be possible to reach it if we receive progress in trade talks between the UK and the EU. If the pressure on the pound persists in the first half of the day after the release of a number of fundamental reports on the UK, then I recommend opening long positions again, but only from a large local low of 1.2919, and only if a false breakout is formed there. In case bulls are not active at this level, you can buy GBP/USD from a more recent low of 1.2865, counting on a correction of 20-30 points within the day.

The Commitment of Traders (COT) report for October 20 showed a reduction in short positions and a sharp increase in long positions. Long non-commercial positions rose from 36,195 to 39,836. At the same time, short non-commercial positions fell from 45,997 to 41,836. As a result, the negative value of the non-commercial net position slightly increased and reached -2,000, against - 9,802 a week earlier, which indicates that the sellers of the pound retain control and also shows their minimal advantage in the current situation.

To open short positions on GBP/USD, you need:

The primary task for pound sellers is to protect resistance at 1.2997. Forming a false breakout on it will be a signal to sell the pound in order to continue the current downward trend. Pessimistic news on Brexit could raise pressure on the pair, leading to another fall and a breakout of support at 1.2919. However, you can only open short positions from there, subject to being able to settle below this level and a reverse test from the bottom up, which forms an additional entry point into selling GBP/USD. In this case, aim for a low of 1.2865, where I recommend taking profits. In case GBP/USD grows above the resistance of 1.2997 in the first half of the day, against the background of the release of positive fundamental statistics for the UK, I recommend postponing short deals until we have tested a high of 1.3058, counting on a correction of 20-30 points.

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Indicator signals:

Moving averages

Trading is carried out slightly below the 30 and 50 moving averages, which indicates that the pressure on the pair remains.

Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differs from the general definition of the classic daily moving averages on the D1 daily chart.

Bollinger Bands

A breakout of the upper border of the indicator in the 1.3000 area will lead to a new wave of growth of the pound. In case the pair falls, support will be provided by the lower border of the indicator in the 1.2955 area.

Description of indicators

  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
  • MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-commercial speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
  • Long non-commercial positions represent the total long open position of non-commercial traders.
  • Short non-commercial positions represent the total short open position of non-commercial traders.
  • Total non-commercial net position is the difference between short and long positions of non-commercial traders.
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EUR/USD: plan for the European session on October 29. COT reports. Germany steps up quarantine measures, euro under pressure

To open long positions on EUR/USD, you need:

The euro was under pressure yesterday despite the absence of important fundamental reports, as things in the eurozone countries are gradually deteriorating amid the spread of the second wave of coronavirus. In Germany, Chancellor Angela Merkel announced a partial lockdown with the closure of bars, restaurants and other public places. As for yesterday's deals, the morning sale was more successful. The 5-minute chart clearly shows how, after breaking through the 1.1761 level, the bulls tried to return the market to their side, but testing this area from the bottom up formed a new signal to open short positions in order to continue the current downward trend, which caused the pair to fall to the support area of 1.1732. I recommended opening long positions immediately on a rebound from this level, counting on a correction of 15-20 points, which is what happened. The bears formed a breakout and settled below this range in the afternoon, however, a larger downward movement did not take place, as a result of which the pair returned back to the resistance of 1.1761, which is currently being traded around.

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Focus will be on resistance at 1.1761. Buyers need to settle above this range in order to return the bull market. Testing the 1.1761 area from top to bottom generates a signal to buy EUR/USD in order to hit a high of 1.1796, where I recommend taking profits. The 1.1835 level will be the next target. However, a lot will depend on the European Central Bank's decision on interest rates. The pressure on the euro will return in case stimulus programs are expanded and rates are lowered. Therefore, forming a false breakout at the 1.1723 level in the first half of the day will be a signal to open long positions. In the scenario of a breakout of this range, I do not recommend rushing to buy. Updating support at 1.1688 and forming a false breakout there will allow the bulls to count on some upward correction of the pair, or at least a temporary stop in the bear market. I recommend opening long positions immediately on a rebound from a low of 1.1644 with the aim of a rebound of 15-20 points within the day.

The Commitment of Traders (COT) report for October 20 recorded an increase in long positions and short ones. However, there were more of the latter, which led to an even greater decrease in the positive delta. Despite this, the buyers of risky assets believe in the continuation of the bull market, but prefer to act with caution, as there is no good news for the eurozone yet. Thus, long non-commercial positions increased from 228,295 to 229,878, while short non-commercial positions increased from 59,658 to 63,935. The total non-commercial net position decreased to 165,943, against 168,637 a week earlier.... However, the bullish sentiment for the euro remains rather high in the medium term. The more the euro falls against the US dollar at the end of this year, the more attractive it is for new investors.

To open short positions on EUR/USD, you need:

The sellers' should protect resistance at 1.1761, slightly above which the moving averages pass, playing on the bears' side. Considering that the trend is downward, it is better to bet that it will continue today, since the ECB's decisions may negatively affect the euro. Forming a false breakout in the 1.1761 area forms a new entry point for short positions, and the main target will be a breakout and having to settle below the 1.1723 level. Testing it from the bottom-up, similar to yesterday's sale, which I analyzed a little higher, generates an additional signal to open short positions in euros, which will lead to a larger sale in the area of the low of 1.1688. The 1.1644 level will be the next goal, where I recommend taking profits. If the pair rises above 1.1761 and there is no bears' activity there, I recommend postponing short positions and selling the euro immediately on a rebound from yesterday's resistance at 1.1796, counting on a correction of 15-20 points within the day.

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Indicator signals:

Moving averages

Trading is under the 30 and 50 moving averages, indicating a resumption of the bear market.

Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differs from the general definition of the classic daily moving averages on the D1 daily chart.

Bollinger Bands

A breakout of the lower border of the indicator around 1.1723 will increase pressure on the euro. A breakout of the upper border of the indicator in the 1.1761 area will lead to a small upward correction of the pair.

Description of indicators

  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
  • MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-commercial speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
  • Long non-commercial positions represent the total long open position of non-commercial traders.
  • Short non-commercial positions represent the total short open position of non-commercial traders.
  • Total non-commercial net position is the difference between short and long positions of non-commercial traders.
The material has been provided by InstaForex Company - www.instaforex.com

Analysis and trading recommendations for the EUR/USD and GBP/USD pairs on October 29

Analysis of transactions in the EUR / USD pair

The bears got ahold of the market yesterday, as a result of which the euro moved 45 pips down from the level of 1.1767. It was one of the most profitable days this week.

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Trading recommendations for October 29

A number of economic reports are scheduled for release today, one of which is the data on US GDP. At the same time, the European Central Bank will announce its decision on interest rates, which is expected to lead to a surge in volatility in the EUR / USD pair. If the ECB softens its monetary policy, the pressure on the euro will increase.

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  • Open a long position when the euro reaches a quote of 1.1768 (green line on the chart), and then take profit at the level of 1.1846.
  • Open a short position when the euro reaches a quote of 1.1738 (red line on the chart, and then take profit around the level of 1.1669. If the ECB hints of a rate cut, the pressure on the euro will intensify.

Analysis of transactions in the GBP / USD pair

The pound moved 20 pips up from 1.3045 yesterday, however, afterwards, it fell down again from the level of 1.3016. And although the quote failed to reach the target price of 1.2936, closing at 1.2970 was still profitable.

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Trading recommendations for October 29

Since there are no economic reports scheduled for release today, the attention of traders will be shifted on the next round of negotiations between the UK and the EU over the long-disputed post-Brexit trade deal. Good news about it will lead to a new wave of growth on the British pound, whereas a bad news could lead to another decline in the GBP / USD pair.

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  • Open a long position when the quote reaches the level of 1.3021 (green line on the chart), and then take profit around the level of 1.3090 (thicker green line on the chart).
  • Open a short position when the quote reaches the level of 1.2986 (red line on the chart), and then take profit at least at the level of 1.2922. Bad news on Brexit will continue the downward trend in the GBP/USD pair.
The material has been provided by InstaForex Company - www.instaforex.com

Forecast for EUR/USD on October 29, 2020

EUR/USD

The euro has fueled the expected fall. The single currency lost 40 points yesterday, the reason for this was the introduction of a strict quarantine in France and a fall in oil by 4%. The price has overcome the target level of 1.1754 and is currently gathering forces under it to fall further to the next target of 1.1650. This movement is delayed by the red balance indicator line on the daily chart. The oscillatory line touched the border of the decline area yesterday, now the price has to build up strength to break through the technical supports.

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There are no signs of a possible deep correction on the four-hour chart, the accumulation of forces is likely to have a consolidation character. We are waiting for the price to move to 1.1650 once it is completed.

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

Forecast for AUD/USD on October 29, 2020

Our observation yesterday of the consolidation nature of the Marlin oscillator was confirmed—the price declined as it happened on September 21. The Australian dollar has worked out the first target of 0.7058. Now, it faces the next target of 0.6970 (June peaks), and then 0.6938, which is the support for the embedded line of the price channel.

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The Marlin oscillator turns slightly up on the four-hour (H4) chart, and the price probably needs to adjust a little, following a strong fall. Upon the correction, the Australian dollar is expected to resume declining toward the designated targets.

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

USD/JPY Forecast for October 29, 2020

USD / JPY

The strengthening of the yen yesterday was not strong enough against the background of the collapse of the US stock market by 3.53% (S&P500), the pair fell by only 16 points and today in the Asian session has already covered that fall. The signal line of the Marlin Oscillator is going upward, the price is likely going into a correction.

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The room for correction is solid up to the price channel line at 104.86. Fixation above the level will allow the price to develop a new offensive to the Kruzenshtern line at 105.50.

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Based on a four-hour chart, the correction situation looks more definite. First of all, it is the formed convergence of the price with the Marlin oscillator. But in front of the price on the way to 104.86, there is the Kruzenshtern line with the level of 104.77 that cannot be overcome. The price once again creates a situation of uncertainty. When the price will move below yesterday's low of 104.14, it will resume a further decline in the pair towards the target of 103.75.

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

Overview of the GBP/USD pair. October 29. The pound started a new downward trend amid the futility of negotiations on a free

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - downward.

CCI: -119.4899

The British pound sterling paired with the US currency on Wednesday also began a fairly strong downward movement, however, it has a completely different meaning than the fall of the euro/dollar pair. The fact is that the euro/dollar pair continues to "sit" tightly in the side channel, which can not be said about the pound/dollar pair. If for the EUR/USD pair the fundamental background is more in favor of the euro, then in the GBP/USD pair the fundamental background is more in favor of the US currency. Therefore, yesterday's fall in the British currency may not just be a drop of a hundred points, but the beginning of a new downward trend. The fact is that in America now the main negative is associated with uncertainty. Uncertainty in the life of the country after November 3 or, better to say, after January 20, 2021. Until it becomes clear who will be the new president, the US currency is unlikely to be in high demand. However, in the case of the UK, the problems are purely macroeconomic. And these problems are serious. We will not list again all the possible problems that the British economy may face in 2021. Let's just say that there can be a lot of these troubles. Therefore, we continue to believe that the pound will continue to fall in the long term.

As for the most important topic for the British pound, the topic of Brexit and negotiations on a trade agreement, no new information was received during the third trading day of the week. It was stated that the next round of negotiations will last until at least Thursday, so if we expect any positive information, it will be during today. However, to be honest, despite the "positive rumors" and statements of some top officials of the EU countries, there is still little chance of reaching an agreement between London and Brussels. Yes, the negotiations are ongoing, but they have been going on for more than 6 months. During these six months, has there been a single communication concerning the sections of the document where the Europeans and the British managed to reach a consensus? Everyone talks only about those issues in which it is impossible to come to a common opinion and nothing changes here. Therefore, today we may receive another batch of "optimistic" news that Michel Barnier and David Frost again failed to agree with each other. Also on Wednesday, Charles Michel, President of the European Council, gave an interview to a British tabloid. He said that the negotiations are entering the most important phase, however, he is not at all sure that a deal with Boris Johnson is possible within the next two weeks (remaining until the next deadline of the British Prime Minister). Also, Charles Michel did not tell the markets anything important, limiting himself to general phrases.

Thus, the British pound still has no place to wait for support. Even technical factors are currently against it. The pound has risen quite strongly against the dollar in the past six months, as well as in recent weeks. Given the fact that the state of the UK economy is not much better than the US, we do not believe that such a strong growth of the pound is fully justified. But even if it is justified, there must be a downward correction. Also, as part of the upward movement in recent weeks, the price has worked out the Fibonacci level of 61.8% from the fall between September 1 and 23. Thus, the probability of further downward movement is growing, and we expect to see the pair near the level of 1.2700 in the coming weeks. As you can see, both fundamental factors and technical "for" the US dollar. If after November 3, tensions related to the presidential election in America subside, this will be another, additional reason to buy the dollar, which has become cheaper in the last six months.

As for the "coronavirus" problems, we previously considered this topic extremely important, but now both the United States and the United Kingdom have entered the phase of the second "wave", so the epidemiological situation is approximately the same in both countries. Therefore, traders are unlikely to react to the new figures for the spread of the COVID-2019 virus. But if the British economy is waiting for a new "lockdown", this may be another reason to get rid of the British currency, as the British economy will again begin to shrink at a high rate. Unlike the American one, which Trump is not going to close for a second "hard" quarantine.

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The average volatility of the GBP/USD pair is currently 99 points per day. For the pound/dollar pair, this value is "average". On Thursday, October 29, thus, we expect movement inside the channel, limited by the levels of 1.2888 and 1.3086. A reversal of the Heiken Ashi indicator-up signals a possible resumption of the upward movement. Please note that the last 4 out of 5 trading days ended with volatility lower than 104 points. So, the average volatility may be even lower than 99 points per day.

Nearest support levels:

S1 – 1.2939

S2 – 1.2878

S3 – 1.2817

Nearest resistance levels:

R1 – 1.3000

R2 – 1.3062

R3 – 1.3123

Trading recommendations:

The GBP/USD pair has started a new round of downward movement on the 4-hour timeframe. Thus, today it is recommended to stay in short positions with targets of 1.2888 and 1.2817 as long as the Heiken Ashi indicator is directed down. It is recommended to trade the pair for an increase with targets of 1.3086 and 1.3123 if the price is fixed back above the moving average line.

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

Overview of the EUR/USD pair. October 29. Donald Trump has embarked on a plan "B". New "coronavirus" anti-records in the

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - downward.

CCI: -165.0362

During the third trading day of the new week, the EUR/USD pair resumed its downward movement. However, despite this, the pair continues to stay inside the side channel 1.1700-1.1900 (or its alternative 1.1640-1.1920). One way or another, it is the flat that remains, and all the up and down movements are just local trends inside the side channel. Thus, we would not draw any conclusions on yesterday's drop in quotes and the strengthening of the US currency. We can't say that the American economy is becoming more attractive because traders are finally paying attention to the dollar or the upcoming presidential election is no longer scaring the markets or that the "coronavirus" in Europe is gaining momentum or that Joe Biden now has an even better chance of winning. Thus, most likely, we are dealing with a purely technical drop in quotes inside the side channel, that's all. Contrary to the opinion of some traders, if the market does not receive important information or the markets are openly waiting for an event, this does not mean that the price at this time just stands still and is trading in a 10-point range. It still moves in different directions and can even cover impressive distances. After all, the currency market is created not only for speculators who enter it to make a profit. The foreign exchange market is a set of entities that can buy and sell currency based on their own needs, and not to make a profit.

Meanwhile, the US Election Day is less than a week away. Over the past three months, we have regularly written about the elections, and all this time the pair has been trading in the 200-250 point range, showing no desire to form a trend. Another pile of sociological research showed that Joe Biden continues to lead, 11% ahead of Trump. Well, Trump, in turn, began to implement his plan "B", which can work. We think it's no secret that Trump has already come to terms with the fact that he is unlikely to win the election. Still, Biden's 11% advantage, which has been stable over the past two months, needs to be somehow leveled in the elections themselves. And how to level such a huge number of votes? 11% is about 16 million voters. Of course, given the peculiarities of the American electoral system, these 11% advantages do not mean that Biden will get 11% more electoral votes. Rather, on the contrary, it means that the gap may be much larger in favor of Biden or even Trump will win, as in 2016, when all the polls also predicted his defeat. However, we are still inclined to believe that the best result for Trump may be a minimal gap from Biden. And the current president should not expect more, given the number of mistakes that he made as president of the country with the largest economy in the world. And what will give Trump the minimum loss? At first glance, nothing, however, at the same time it can give everything. That is, winning the election. The fact is that about 10 states in America are "controversial", that is, it is difficult to predict the victory of a particular candidate. There are states with more than 20 electoral votes. For example, there are 55 of them in California. What would it be? For example, if California has 20 million residents and 9,999,999 of them vote for Biden, and 10,000,001 for Trump, then Trump will win in this state and he will be given all 55 "electoral" votes that overlap Biden's victory in 10 states with the number of votes 4-7 at once. Thus. Biden can win 10 states and get fewer "electoral votes" in them than Trump won by a 2-vote margin in California. Now let's assume that the gap between Trump and Biden after counting the votes will be 30-40 votes. Trump immediately accuses the Democrats of fraud and fraud and asks the Supreme Court to review the results of the vote in any state where he lost, with the number of "electoral" votes more than 20. The Supreme Court consists of nine justices and at least five support Republicans or are appointed by Republicans to their posts. Among them is Amy Barrett, who was appointed yesterday to replace the untimely Ruth Ginsburg. The Senate voted in favor of her appointment. 52 Republican votes were enough to overlap 48 democratic votes. And in the case of judicial proceedings, 5 votes of Republican judges will be enough to block 4 votes of democratic judges. So much for Donald Trump's plan. Of course, the fraud of the Democrats in a particular state still needs to be proved. Moreover, Trump cannot claim that there was fraud in several states where he lost. However, there is no doubt that his team is already working hard on "evidence" of election fraud by the Democrats. Thus, Joe Biden and his team need to either win by a large margin so that any claims from Trump do not have any weight and significance or work on their evidence base that it is the Republicans who are trying to rig the election.

Well, the euro/dollar currency pair may once again turn around the level of 1.1700 or slightly lower and resume its upward movement. The last thing I would like to say is that the number of cases of "coronavirus" has been growing again in America recently. In recent days, 70-80 thousand cases have been recorded again, however, this also applies to the whole world. In recent days, 500,000 new cases have been registered daily. Thus, the European second "wave" is not an exclusively European trend. The pandemic is gaining momentum around the world. Therefore, the US dollar cannot grow now due to the difficult situation with the epidemic in Europe. Despite all the promises of Donald Trump, there is still not a single fully tested vaccine in the world, and even if it appears in the near future, it is unlikely that its production will be put on stream in the near future. The entire world's population can expect to be fully vaccinated no earlier than next summer.

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The volatility of the euro/dollar currency pair as of October 29 is 64 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.1689 and 1.1817. A reversal of the Heiken Ashi indicator to the top may signal a round of upward correction.

Nearest support levels:

S1 – 1.1719

S2 – 1.1658

S3 – 1.1597

Nearest resistance levels:

R1 – 1.1780

R2 – 1.1841

R3 – 1.1902

Trading recommendations:

The EUR/USD pair continues its downward movement, but may be stuck in the area of 1.1689-1.1719. Thus, today it is recommended to maintain open sell orders with targets of 1.1689 and 1.1658, while the Heiken Ashi indicator is directed down. It is recommended to consider buy orders if the pair is fixed above the moving average line with targets of 1.1841 and 1.1902.

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

Hot forecast and trading signals for GBP/USD on October 29. COT report. Results of next round of Brexit talks to be announced

GBP/USD 1H

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The GBP/USD currency pair also fell for most of the day on Wednesday, October 28, and it managed to gain a foothold below the Senkou Span B line and nearly reached the support level of 1.2897. However, on the way to this level, it went up and began a rather rapid pullback, within which it returned to the Senkou Span B line and the 1.3004-1.3024 area. A price rebound from this area and line can provoke a new round of downward movement and can be regarded as a specific sell signal. Therefore, in spite of the fact that the quotes left the descending channel earlier, the downward trend, as we see, has not been canceled and is still present. In general, we continue to believe that the pair has much more chances to continue the downward movement than vice versa.

GBP/USD 15M

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Both linear regression channels turned to the downside on the 15-minute timeframe, which reflects the previous day's trend. The downward movement could return while the pair stays below the Senkou Span B line.

COT report

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The new Commitments of Traders (COT) report for the pound showed that non-commercial traders were quite active during October 13 to 19. However, at the same time, the last few reports have completely made the situation complicated. The "non-commercial" group of traders opened 4,485 Buy-contracts (longs) and closed 4,072 Sell-contracts (shorts). Thus, the net position of professional traders immediately grew by 8,500 contracts, which is quite a lot for the pound. However, the problem is that non-commercial traders have been building up their net position (strengthening the bullish sentiment) over the past few weeks, and before that they have reduced their net position for several weeks (strengthening the bearish sentiment). Thus, over the past months, professional players have not even been able to decide in which direction to trade. The fundamental background continues to be very difficult and ambiguous for the pound/dollar pair, which is why the trades are so confusing. The pound sterling lost approximately 110 points during the reporting period. And the net positions of commercial and non-commercial traders are now practically zero. In other words, both the most important and largest groups of traders have approximately the same number of Buy and Sell contracts open. Naturally, such data from the COT report does not allow any conclusions, either short-term or long-term.

The fundamental background for GBP/USD remained unchanged on Wednesday. Moreover, similar to the euro/dollar pair's case, there was not a single event that could affect the pair's movement and the mood during the day. Nevertheless, the trades were quite active. Traders may receive information from negotiations between London and Brussels regarding the trade deal, since the end of the next round is scheduled for today. Perhaps this topic can really affect the pound/dollar pair. All other topics are now only background in nature. In addition, the US is set to release data on GDP for the third quarter and is expected to grow by 31%. While this is not the same as the 31% loss in the second quarter, if this figure is confirmed, then it will be safe to say that the American economy is recovering very well. And this can even be credited to US President Donald Trump, who did not allow the country to be closed for a second lockdown. But at what cost... In addition, reports on applications for unemployment benefits, as well as an index of personal consumption expenditures, will be published. However, these data are of secondary importance under current conditions.

We have two trading ideas for October 29:

1) Buyers for the pound/dollar pair failed to stay above the Senkou Span B line. Thus, the initiative is now not in their hands. You are advised to consider long positions in case the price settles above the Senkou Span B and Kijun-sen lines while aiming for the resistance area of 1.3160-1.3184. Take Profit in this case will be up to 70 points.

2) Sellers continue to pull down the pair and have broken the Senkou Span B line (1.3018) and the support area of 1.3004-1.3024. A correction is currently taking place, but in case the price rebounds from the 1.3004-1.3024 area, we recommend considering options for opening new sell orders while aiming for the support level of 1.2897. Take Profit in this case can be up to 80 points.

Hot forecast and trading signals for EUR/USD

Explanations for illustrations:

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.

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

Hot forecast and trading signals for EUR/USD on October 29. COT report. Traders await US Q3 GDP and ECB meeting results

EUR/USD 1H

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The euro/dollar pair suddenly moved down on the hourly timeframe on Wednesday, October 28, easily crossing the Kijun-sen and Senkou Span B lines and also went below the descending channel. No macroeconomic report published for the day and not a single important event took place. Nevertheless, market participants found reasons for a new round of buy positions on the dollar. It was within the same horizontal channel of $1.17-1.19. Take note that the pair reached the lower line of this channel almost perfectly, thus, we can now expect an upward reversal and gradual growth to the upper channel line, that is, to the area of the 1.1900 level. The technical picture remained practically unchanged even after the pair lost 160 points. Globally, traders have the same flat at their disposal, but they still have to catch short-term trends on the hourly chart.

EUR/USD 15M

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Both linear regression channels turned to the downside on the 15-minute timeframe, which is eloquent evidence of the current trend on the hourly chart and indicates that there are no signs of completing the downward movement.

COT report.

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The EUR/USD pair fell by around 40 points during the last reporting week (October 13-19). But in general, no significant price changes have been observed for the pair in recent months. Therefore, data from any Commitment of Traders (COT) report can only be used for long-term forecasting. The new COT report showed even fewer changes in the mood of professional traders than the previous one. Non-commercial traders, who, we recall, are the most important group of traders in the foreign exchange market, opened 1,081 Buy-contracts (longs) and 673 Sell-contracts (shorts). Take note that the "non-commercial" group decreased its net position in the last two weeks, which may indicate the end of the upward trend. However, the data provided by the latest COT report does not tell us anything at all. There are no changes, since non-commercial traders have opened almost 300,000 euro contracts. Thus, opening or closing of 1,000-2.000 contracts does not indicate anything. The lines of net positions of the "non-commercial" and "commercial" groups (upper indicator, green and red lines) continue to barely narrow, while the pair itself continues to trade in a horizontal channel. Therefore, we stick to our opinion - the upward trend is completed or is about to be completed, and the high reached near the 1.2000 level may remain the peak of this trend.

No macroeconomic report from both the US and the EU on Wednesday, and not a single important event at all. The big picture is systematically approaching Election Day and now it is generally impossible to say what factors market participants would base their trades in. Although, perhaps, we do not need to look for factors, because they do not exist. As we have mentioned many times, the foreign exchange market is not only about speculators who aim to make money. They are also commercial companies, central banks, which have completely different goals. Thus, the current strengthening of the dollar (within the same horizontal channel of 1.17-1.19) may not mean anything fundamentally. By and large, the pair lost only 160 points in a week, and before that it had risen in price by the same amount. Thus, we would not panic and make hasty conclusions since the quotes lost 60 points. The European Central Bank will hold a meeting today. Traders do not expect the ECB to change any parameters of monetary policy, thus, most likely, the meeting will turn out to be of passing. In addition, there will be quite important macroeconomic publications in America, like GDP for the third quarter.

Hot forecast and trading signals for GBP/USD

We have two trading ideas for October 29:

1) The EUR/USD pair moved down. Therefore, buyers are advised to try to resume trading upward while aiming for the resistance area of 1.1887-1.1912 and the 1.1926 level, but not before the quotes settle above the descending channel. Take Profit in this case can be up to 70 points. The 1.1887-1.1912 and 1.1900-1.1920 areas are extremely strong and bulls will unlikely be able to overcome them in the current environment.

2) Bears were active yesterday and they managed to pull down the pair by a significant distance. Therefore, sellers are advised to reopen short positions with a target on the support area of 1.1692-1.1699, if an eloquent sell signal is generated, for example, if the price rebounds from the Senkou Span B line (1.1784). Take Profit in this case can be up to 70 points.

Explanations for illustrations:

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.

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

Oil #CL — bulls can't, bears don't want to

The second wave of COVID-19 again put oil prices at risk of decline. However, is there a danger that the dramatic events that took place in the oil market in the spring of 2020 will repeat and oil will collapse to the values of $20 and below? What will happen in the oil market if Joe Biden wins the US election? Let's try to figure it out in this article.

The second wave of coronavirus infection has covered the world economy, and the incidence rate in the developed world is now even higher than it was in the spring. With the sole exception of China whose restoration is proceeding at a fast pace. However, in other countries, the recovery is not so fast, since many industries, such as tourism or international air transport, have either virtually ceased to exist or the size of the business has significantly decreased during the pandemic era.

The epidemic has not yet been brought under control. However, measures to restrict and close the economy, which many governments have taken this spring, have not been applied now. Widespread blocking and compensation for business losses turned out to be too expensive. Accordingly, the impact of these measures on oil prices is now offset by more lenient quarantine conditions. Thanks to the OPEC+ agreement and the recovery of the global economy in the summer of 2020, oil prices have experienced growth, and commercial reserves in the United States have significantly decreased, although they still exceed their average volumes (Figure 1).

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Figure 1: Commercial oil reserves in the United States

Even though in the past two years, China has started actively trading oil for the yuan, the price of black gold is still determined in US dollars and on US exchanges, and the behavior of traders in WTI futures contracts determines the dynamics of oil prices around the world.

If we consider the situation in the context of supply and demand on futures exchanges, Open Interest in futures contracts is currently at the lowest values since the summer of 2016 and amounts to 2.5 million contracts. At the peak of futures demand, in April 2020, the OI was equal to 3.3 million contracts, which together with the OPEC+ deal allowed the price to grow from a level close to zero to the current values.

Now the situation is qualitatively different. Paradoxically, speculators are the main driving force of the price. If speculators do not see prospects for growth, they will not put their money on it. At the same time, since the summer of this year, the total long positions of speculators on the WTI oil futures market, which has the #CL designation in Instaforex terminals, amount to about 350 thousand contracts. At the peak of demand in June, their value was 381 thousand, now the positions of speculators are 332 thousand. However, even for a deep decline in the oil price, the conditions on the futures market in the current situation are not enough. Speculators do not try to push oil down and reduce their sales, which means that they do not see any opportunities to reduce the price yet. Everything, of course, can be in our turbulent times, but oil prices look at the moment as if the bulls can't, and the bears don't want to.

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Figure 2: medium-term technical picture of Light Sweet Crude Oil #CL

The daily time looks at the situation from the perspective of one month to one quarter, and oil traders should take this factor into account when making decisions. As shown in chart 2, starting from June, #CL oil quotes are clamped in the range of $ 35.50 - $ 44.50 with a width of 9 dollars. Since September, the range has narrowed to $ 4, which fully reflects the current uncertainty in the market. In this situation, the only strategy that can be used by traders in the stock signals trading system will be purchasing from bottom to top of the range and sales from the top end of the range to the lower limit.

Among other things, the range is a factor in reducing volatility, which can increase sharply when the price breaks out of the range. The middle of the range will continue to function as support or resistance, depending on which direction the momentum is directed. The difficulty is that being in the range, the price often makes false breakouts outside its borders. However, careful observation of false movements can provide a great opportunity for a trader to work in the opposite direction of a false breakout. Detecting and identifying false breakouts and traps requires special training and experience from the trader, so novice traders should refrain from using this trading strategy, which does not prevent them from carefully observing and studying it for further application.

With the US election just one week away, there is a perception in the markets that if Joe Biden wins the presidential race, it will be negative for oil. However, not everything is so simple. Biden does advocate limiting the use of hydraulic fracturing on federal lands, but if he wins, this will primarily put pressure on the American oil industry. According to some estimates, Biden's victory will cost 1 million barrels of reduced production in the United States, which is an undoubted positive for the oil market, since in this case, the US share will be received by oil companies from Russia and Saudi Arabia.

In conditions of high uncertainty, traders need to be extremely careful not to open positions with increased risks. On the contrary, the risks should be reduced, not increased. Be careful, follow the rules of money management.

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