EURUSD Day Trades – October 10

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EUR/USD, GBP/USD — October 10th 2020

Watch the latest analysis of the EUR/USD, GBP/USD Forex pairs for the October 10th in this video. EUR/USD — We had a bad session on Tuesday. We are now testing the support on the uptrend line as seen in the daily chart. A move below the 1.2850 level could send this pair looking for 1.2500 again. Certainly we are making lower high at this point of time. Its only a matter of time before we start selling again. We see a ton of resistance between 1.30 and 1.35 levels and as such we don’t want to go long. And there exists many headline risks out there inorder to be involved with the Euro, espcecially against the US Dollar which is seen as a safe haven trade. GBP/USD — In a similar move the Pound fell against the US Dollar significantly into the 1.60 level. The 1.60 level looks supportive and this is seen as a buying opportunity. We have to wait and see how this trades for the day. If we break the lows from Tuesday session, we think at that point of time a move down two 1.58w level is almost guaranteed. We recently broke out of the ascending triangle at the 1.58 level which was top of this triangle. If we break down here we will more likely find support at 1.58 level. Long term is bullish for this pair howewer in the short term the US Dollar looks strong. The 1.60 level is crucial for this pair in whats next for this pair for the next 200 pips or so.

EUR/USD Forecast October 10-14

EUR/USD extended its range to the downside in the wake of the new quarter, but never went too far. When will it make the break? A key German survey is the highlight of the upcoming week. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.

Talk about ECB tapering triggered a jump in EUR/USD but this did not last. It is unclear if the ECB will taper bond-buys before ending the program, begin tapering in March or if they have even discussed it. With low inflation, the ECB’s QE could run and run. Euro-zone PMIs came out mostly as expected. Data in the US was OK: a small miss on the NFP did not hurt the greenback’s momentum, especially as other figures were more upbeat. The euro was dragged down by pound flash crash amid speculation the euro could be next.

EUR/USD daily graph with support and resistance lines on it. Click to enlarge:

  1. German Trade Balance: Monday, 6:00. The euro-zone’s powerhouse enjoys a surplus in exports, something that keeps the euro bid. After a trade surplus of 19.4 billion in July, August is expected to see a marginally narrower figure with 19.3 billion.
  2. Sentix Investor Confidence: Monday, 8:30. This wide survey has risen from the post-Brexit abyss, surprising with a jump to 5.6 points in September. Another advance to 6.2 is on the cards now.
  3. German ZEW Economic Sentiment: Tuesday, 9:00. This early survey by ZEW disappointed back in September by remaining unchanged at only 0.5 points, reflecting a lack of real optimism. Contrary to the IFO figure, this survey sees no significant recovery in confidence. A bounce to 4.2 is projected. The all-European number carries expectations for a rise from 5.4 to 6.3 in October.
  4. German WPI: Wednesday, 6:00. Wholesale prices eventually feed into retail and consumer prices. In August, the WPI surprisingly dropped by 0.7%. A rebound of 0.3% is estimated for September.
  5. French Final CPI: Wednesday, 6:45. September’s initial inflation numbers disappointed in September. In France, a drop of 0.2% was recorded. It will probably be confirmed now.
  6. Industrial Production: Wednesday, 9:00. Despite being released after the French and German figures (among others), the wider euro-area figure can surprise. After a fall of 1.1% in July, a bounce with 1.4% is predicted for August.
  7. German Final CPI: Thursday, 6:00. Prices in Germany rose by 0.1% m/m according to the initial publication. They will likely be confirmed now.
  8. Trade Balance: Friday, 9:00. Germany’s exports are mostly responsible for the high trade surprlus. No big changes are expected now: a surplus of 20.5 billion for August is expected to follow the 20 billion number seen in July.

* All times are GMT

EUR/USD Technical Analysis

Euro/dollar opened the quarter with an attempt to move higher, above the 1.1230 level mentioned last week but it eventually dropped, even temporarily dipping under 1.1125.

Technical lines from top to bottom:

1.1535 is a stepping stone as seen in May 2020 and also beforehand. It is followed by the very round level of 1.15.

1.1460 was a key resistance line in 2020 and 1000 above the multi-year lows. 1.1410 capped the pair in early June. 1.1375 worked as resistance in February and as support in May 2020.

1.1335 worked as the bottom bound of a higher range and then capped recovery attempts in May. 1.1230 capped the pair after the fall in May and worked as resistance.

1.1190 is the post-Brexit high seen in July. 1.1125 cushioned the pair in early September. 1.1070 served as a clear separator of ranges during February and also beforehand.

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1.10 is a round number and significant resistance. 1.0905 is the swing low seen in June and serves as a weak support. 1.0825 worked as support in early March 2020 and should also be watched. This is now a triple bottom.

The post-Draghi low 1.0780 replaces 1.08 as support. 1.0710 is the next support line on the chart after temporarily capping the pair in April 2020.

Further below, the 2020 low of 1.0520 and the 2020 low of 1.0460 provide further support.

I turn from neutral to bearish on EUR/USD

The euro could be next, after the tumble down of the British pound. It is important to remember that Brexit is also the EU being left out by the UK, and not only an event damaging to Britain. In addition, the ECB is set to extend QE and the Fed has good enough data to raise rates.

Our latest podcast is titled Bold BOJ vs. Fearful Fed

About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts. Yohay’s Google Profile

EUR/USD Day Trading Strategies

As the two largest currency markets in the world, the EUR/USD pairing offers excellent liquidity for forex traders of all types. While the pairing has seen periods of high volatility—most notably in 2020 and 2020, due in part to Greece’s economic crisis—the recent trading history for this pair has seen lower volatility and tight spreads.

This lack of volatility can be a challenge for day traders, since stable prices for the pair can limit a trader’s potential profit margin. The risk is lower, but so is the potential reward. Despite this overall stability, there are still opportunities to capitalize on EUR/USD volatility by paying attention to price movements and tracking potential market triggers.

Here’s a look at some possible day trading strategies to deploy with the EUR/USD currency pair.

Tracking Price Movements

Through chart analysis alone, there are several indicators that can represent a potential trading opportunity on EUR/USD. By paying close attention to these price movements, traders may be able to get in early on potential movements that may lead to profits from this pairing’s volatility.

Here’s a look at some of the top identifiers of a trading opportunity.

Opening Price Principle

In a liquid market, the opening price principle can be a reliable predictor of whether a market will open or close above the opening price on a given day. The application of this principle is a little trickier with forex than with other types of trading since forex markets never close, but many traders use 7:00 AM GMT as a de facto open to the day.

To apply the opening price principle, compare the price of a trading pair at 7:00 AM GMT to its price at 9:00 AM GMT. If the price is above the opening mark, the opening price principle says there’s a 65 percent chance the pair will close the day positive. If the 9:00 GMT price is below the opening mark, there’s a 65 percent chance the pair will close the day negative. Day traders can use this to forecast how the price might move over the course of the day, limiting losses or, conversely, remaining patient with a trade in hopes of reaping profits.

Fractals

Repeating patterns in the EUR/USD pairing can indicate future movement that sets up for a trade. A fractal is one of the most basic patterns used in chart analysis, but it provides a reliable signal for traders to use when watching forex charts.

Fractals are comprised of at least five bars that reflect a turning point in trading price. In a bearish fractal, a middle bar will be higher than the two lower highs on each side, indicating that the price has topped out and is potentially headed for a downturn. A bullish fractal is inverted, with the middle bar lower than two bars on each side, setting up a potential upswing in trading value.

Key Numbers

When evaluating charts for potential support and resistance levels, key numbers can be used to identify price points where orders can be placed. In addition to the double-zero and 50 retracement lines, where your trade has increased in value by 100 or 50 percent, respectively, traders also commonly use the 35 and 65 lines, as well as the more marginal 25 and 75 lines, to identify levels where profits should be banked—or to place stop orders that limit losses. Some other traders use the Fibonacci retracements of 23.6%, 38.2%, and 61.8%.

Average True Range

This metric is a calculation of the volatility of a trading pair over time—typically, over a 14-day window. While ATR doesn’t have value as a predictor of price movements, it can be used to identify windows where EUR/USD is exhibiting higher-than-normal volatility, making it an attractive prospect for day trading.

Other Market Considerations

Time of day is always an important factor to consider when trading forex, but time of year also has an important role in EUR/USD trading opportunities.

For example, British banking holidays can slow down trading activity for this pair, which can affect the reliability of chart patterns and other indicators. Similarly, traders should be mindful of holidays in both the United States and Europe that could result in fewer trades.

The risk in trading during slow periods isn’t necessarily because the liquidity and volatility of this pairing change—it’s that the normal trends used to analyze any forex pairing tend to be less accurate and reliable.

Similarly, day traders should keep a close eye on data release events in the United States and Europe that could have an effect on currency prices. In the United States, for example, US nonfarm payrolls day, which takes place on the first Friday of every month, can have a significant influence on the trading value of the EUR/USD pair. Similarly, when the European Central Bank announced in March 2020 that it would hold off on raising interest rates until 2020, the trading price for EUR/USD tanked:

Although the pairing’s value recovered over time, such a dramatic fall is something day traders should be mindful of when watching the economic calendar and plotting potential trades.

Conclusion

Due to the challenges of carving out a profit margin with any low-volatility pairing, trading EUR/USD can be a tricky endeavor. Traders should watch charts carefully and be mindful of peak trading windows to identify the best opportunities to trade with this currency pair.

The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice. If such information is acted upon by you then this should be solely at your discretion and Valutrades will not be held accountable in any way.

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