Forex Forecast: 19 – 23/10/2020
How to use the basic technical analysis concepts we have shared with you to predict the next week’s currency pair price movement
EURUSD Rates Week in Review
Last week, our technical indicators suggested going short on the EURUSD between 1.18 and 1.1740, setting a stop loss at 1.18473. This week the EURUSD ranged from 1.1827 to 1.1689. So, this past Monday, we could have shorted the currency pair at 1.18 on an intraday trading, covering it at 1.1786, profiting 0.12%. Tuesday, we could have short it at 1.18 on an intraday trading, covering it at 1.1731. for an extra 0.58% ROI. Yesterday, we could have short it at 1.1772 on an intraday trading, covering it at 1.1719, for 0.45% ROI. Today, Thursday, we could have short again the currency pair at 1.1759, covering it earlier today at 1.1689, locking in an extra 0.6% profit.
The EURUSD pair trades around the 1.1700 level, as the dollar continues to advance on the heels of risk aversion. The main market concerns are pandemic-related, amid the large increase in European coronavirus cases and the lack of a fiscal stimulus program in the US. Stocks are firmly lower worldwide, while government debt yields have also come under pressure.
As for macroeconomic data, the European Union didn’t publish relevant figures. The US, on the other hand, has just release Initial Jobless Claims for the week ended October 9, which unexpectedly rose to 898K, much worse than expected. The country also released the October NY Empire State Manufacturing Index which came in at 10.5, also missing the market’s expectations. The Philadelphia Fed Manufacturing Survey for the same month improved from 15 to 32.3, beating expectations. The discouraging news fuel equities’ slump and provide support to the greenback.
EURUSD falls below 1.17 on rising coronavirus cases, stalled US stimulus talks. The EURUSD is falling below 1.17, the lowest in nearly two weeks. US fiscal stimulus talks are at a stalemate ahead of the elections and rising Euro-zone COVID-19 cases trigger concerns. US jobless claims jump to 898K worse than anticipated.
The EURUSD pair is trading around the 1.1700 figure, after hitting a daily low of 1.1691.
The above 4-hour chart shows that the pair keeps sliding below all of its moving averages, as the 20 SMA gains bearish traction, reflecting an increased selling interest.
Technical indicators remain well into negative levels, although partially losing their bearish momentum. The risk is anyway skewed to the downside, with the immediate support level now at 1.1680, 1.1635, and 1.1590. Resistance levels are at 1.1725, 1.1770, and 1.1810.
For next week and as illustrated in the following EURUSD chart, the EURUSD has violated a support line of a rising parallel channel on 4H. The high momentum bearish candle confirms a strong bearish sentiment. To catch a bearish continuation, we would suggest being focused on a local expanding blue supply area. I will look for an hourly reversal pattern within that to short the currency pair. Technical indicators suggest to short it between 1.17 and 1.165, setting a stop loss at 1.18.
As of 3:29 PM (GMT+1), the EURUSD was trading at 1.1697.
EUR to USD forecast for tomorrow, Euro to Dollar forecast on Friday, October, 16: exchange rate 1.1780 Dollars, maximum 1.1957, minimum 1.1603. EUR to USD forecast on Monday, October, 19: exchange rate 1.1701 Dollars, maximum 1.1877, minimum 1.1525. Euro to Dollar forecast on Tuesday, October, 20: exchange rate 1.1687 Dollars, maximum 1.1862, minimum 1.1512. EUR to USD forecast on Wednesday, October, 21: exchange rate 1.1760 Dollars, maximum 1.1936, minimum 1.1584.
In 1 week, Euro to Dollar forecast on Thursday, October, 22: exchange rate 1.1740 Dollars, maximum 1.1916, minimum 1.1564. EUR to USD forecast on Friday, October, 23: exchange rate 1.1732 Dollars, maximum 1.1908, minimum 1.1556. Euro to Dollar forecast on Monday, October, 26: exchange rate 1.1728 Dollars, maximum 1.1904, minimum 1.1552. EUR to USD forecast on Tuesday, October, 27: exchange rate 1.1794 Dollars, maximum 1.1971, minimum 1.1617. Euro to Dollar forecast on Wednesday, October, 28: exchange rate 1.1769 Dollars, maximum 1.1946, minimum 1.1592.
Disclosures: The material provided herein is for informational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any interests in the EUR/USD or any other securities. This overview may include or be based in part on projections, valuations, estimates and other financial data supplied by third parties, which has not been verified by Pedro Ferreira nor KeySoft. Any information regarding projected or estimated investment returns are estimates only and should not be considered indicative of the actual results that may be realized or predictive of the performance of the EUR/USD or any underlying security. Further, Pedro Ferreira is not long or short in the currency pair. Past investment results of any underlying managers should not be viewed as indicative of the future performance of the EUR/USD.