By Gabriel Ojimadu, Alpari
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On Monday the 9th of October, trading on the euro/dollar pair closed slightly up. Before buyers decided to launch an assault on the B-B channel, they twice returned to the LB balance line. Given that exchanges were closed in the US and Canada due to national holidays, trader activity on the Forex market was low.
Comments made by the ECB’s Sabine Lautenschläger during the US session provided support for the euro bulls. She said that the regulator should start curtailing its asset purchasing program next year. She didn’t give any concrete dates.
Buyers tested the upper boundary of the B-B channel, breaking through it in the Asian session.
Day’s news (GMT+3):
Fig 1. EURUSD rate on the hourly. Source: TradingView
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Yesterday’s predictions came off in full. The price stayed in the upwards channel until the day’s close. There were a few punctures in the lower boundary, but this doesn’t have much bearing now. The price exited the B-B channel, and in Asia, made an approach towards the upper boundary of the A-A channel.
The euro may have been boosted by the Aussie dollar, which rose across the board after the publication of a business confidence report from the NAB.
The fact that sellers failed to defend 1.1750 levels and allowed the price to exit the B-B channel tells us that the right shoulder is starting to form on the daily chart.
Buyers met with resistance around the 90th degree. The A-A channel runs through 1.1785 levels. For now, it’s important that buyers maintain the rate at around its current level for the US session. This flat will provide an opportunity for accumulating long positions. When trading in New York gets underway, they can then try to get a foothold above the 112th degree. I can’t see the euro going any higher than that as the indicators on the hourly timeframe are already overloaded. The target for the next few days is 1.1880.