Trading plan for Oct. 23
We have entered the market selling EUR/USD at $1.2685 (100-period MA on H4). Stop is at $1.2735, take profit 1 is at $1.2625, take profit 2 is at $1.2585. The pair has eroded support of the corrective upside channel, but the odds are of sideways trading above October lows. US inflation increased in Sep. – a USD-bullish factor. The market is now waiting for the euro zone’s PMIs on Thursday. Data will likely show that the deterioration in the region’s economic activity. We are also thinking about USD/CHF longs from 0.9485 with target at 0.9560 and stop loss below 0.9455.
Our forecast for GBP/USD proved to be right: the cable bounced back from the $1.6200/6185 area and touched $1.6010 in Europe. The market was disappointed as the BOE meeting minutes showed no changes in voting: 7 members out of 9 stay on the dovish side. The hawkish MPC member Wale is scheduled to speak at 19:00 GMT, but the upside will likely be limited by the round $1.6100 figure. A daily close below $1.6050 would open the way to $1.5950 and $1.5870. On Thursday UK is scheduled to release retail sales data (forecast – negative).
USD/JPY holds above the 107 mark. However, the 107.50/108.00 area remains strongly resistive for now and we have no reasons to expect a break higher in the near term. Support lies at 106.50 and 106.20. AUD/USD looks too risky to trade. We await fresh signals.