EUR/USD 1H
On the one hand, buyers oddly traded the pair on the hourly timeframe and quite technically on the other on July 10. The first thing we would like to note is that buyers did not break through the resistance area of 1.1326–1.1342, as well as through the resistance level of 1.1362. We remind you that the euro/dollar pair remains in the side channel, limited by the 1.1350 and 1.1200 levels. Thus, it is quite possible to conclude that traders failed to overcome the upper limit of this channel. Second, the pair's quotes were fixed below the ascending channel, so the trend on the hourly chart changed to a downward one. However, sellers failed to push the Senkou Span B line last Friday, so a corrective growth began, possibly within the framework of a new downward trend, which was interrupted near another important Ichimoku line – Kijun-sen indicator. Thus, the pair was trading between the important lines of the Ichimoku indicator on the last trading day of the week. In the current conditions, we are waiting for the resumption of the downward movement. However, it will be quite difficult for bears to break through below the 1.1200 level in the near future.
EUR/USD 15M
The higher linear regression channel turned down on the 15-minute timeframe, which signals a downward trend. The lower channel is directed up, indicating Friday's correction. The latest COT report from July 7 turned out to be quite boring. As usual, we are most interested in changes in contracts in the Commercial category, which represents professional traders entering the foreign exchange market in order to make a profit. Speculators in the reporting week opened almost 6,000 Buy-contracts and only 1,700 Sell-contracts. Thus, the overall net position for this category has increased, which, simply put, means a strengthening of the bullish mood. However, do not forget that the COT report only shows changes that have already occurred, so as a forecasting tool, it always requires confirmation by other signals or factors. The technique currently indicates a high probability of going down.
The fundamental background for the EUR/USD pair was nearly unchanged on Friday. No important news or macroeconomic publications were planned for this day. There was very little news from the European Union last week, and the election of the new president of the Eurogroup was the main event of the week. The only thing that could be noticed on Friday was the statement of the President of the European Council, Charles Michel, regarding the recovery fund. He told MEPs that EU member states continue to consider the European Commission's proposal to create a 750 billion euro fund to help the sectors of the economy most affected by the pandemic. However, according to him, serious differences remain between the members of the bloc on the issue of the balance of subsidies and loans. In other words, those countries that were initially opposed to providing aid in the form of grants (the" stingy four") do not seem to have changed their minds, which means that the entire draft aid package is in question. This is bad news for the euro, but there is no final decision yet, so do not make conclusions ahead of time. Traders continue to pay more attention to the coronavirus epidemic in the United States.
Based on all of the above, we have two trading ideas for July 13:
1) Buyers did not overcome the area of 1.1326–1.1342. Thus, we advise you to purchase the euro only if buyers manage to break the bearish market mood, gain a foothold back above the Kijun-sen line, above the area of 1.1326–1.1342 and the resistance level of 1.1362. We recommend buying the euro only in this case, while aiming for 1.1422. The potential Take Profit in this case is about 55 points.
2) The bears managed to seize the initiative in the market, so now they have an excellent opportunity to return to the Senkou Span B line (1.1265) and continue the downward movement to the area of 1.1228–1.1243 and lower to the support level of 1.1186. It is for these purposes that we advise you to sell the pair at the beginning of a new week. Stop Loss orders can be placed above the critical line. The potential Take Profit in this case is from 30 to 110 points.
