EUR/USD 1H
Buyers again actively traded the euro/dollar pair for an increase on the hourly timeframe on July 13. Despite the fact that the quotes were pinned below the ascending channel a day earlier, thus forming a signal for the end of the upward trend. However, during the past day, the bulls rushed to attack and brought the pair to the upper border of the 1.1200–1.1350 side channel. Formally, the upper limit of this channel was overcome, and even a weak upward trend has formed in the last two weeks, which was illustrated by the ascending channel, but we still can not say that the current movement with very frequent and deep corrections, first, can be called a trend, and secondly, is convenient. We are still inclined to the option that the bulls are not strong enough to develop a real trend, so we see corrections every day that match the size of the impulsive areas. Moreover, buyers retreated again after reaching the resistance level of 1.1366, so we now expect a new round of downward correction.
EUR/USD 15M
Both linear regression channels are directed upwards on a 15-minute timeframe, which clearly signals an upward trend in the most short-term plan. However, not overcoming the level of 1.1366 can pull down the quotes. The latest COT report from July 7 was quite boring. As usual, we are most interested in changes to 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 total net position for this category has increased by about 4,000, which, simply put, means an increase in the bullish mood of major players. However, do not forget that the COT report only shows changes that have already occurred, so it always requires confirmation as a forecasting tool. At this time, the technique indicates a high probability of going down. Or, at least, the weakness of the upward trend, which is extremely inconvenient to work with.
The fundamental background for the EUR/USD pair did not change at all on Monday, as no important reports were scheduled for the day. If we talk about the fundamental background from Europe, the most important event now is the summit scheduled for July 17-18, during which the issue of forming a 750 billion European economic recovery fund will be discussed again, on which the EU member states have accumulated a lot of disagreements, as well as on the budget for 2021–2027. As for ordinary reports and statistics, data on industrial production will be published in the European Union today, but it is unlikely for it to have a serious impact on the mood of market participants. In some ways, technique and foundation currently contradict each other, since there was a signal to end the upward trend when the quotes left the ascending channel. At the same time, the pair easily reached the previous local high of 1.1371 yesterday. Thus, before the EU summit, we believe that data on the number of daily diseases COVID-2019 in the US will be more important for market participants, rather than economic statistics.
Based on the foregoing, we have two trading ideas for July 14:
1) Buyers again returned the pair to the level of 1.1366, which was already reached last Thursday. And, like last Thursday, buyers can now put the initiative in the hands of bears for a short time. One way or another, but we do not expect the pair to continue growing right now, although formally overcoming the level of 1.1366 will allow us to open long positions with the target at the level of 1.1432. Potential Take Profit in this case is about 60 points.
2) The bears seemed to be able to seize the initiative at the end of last week, but they failed to gain a foothold below the Senkou Span B line and buyers returned to dominate. Now, sellers need to wait for a new chance in the form of consolidating the pair below the Kijun-sen line (1.1314), which will make it possible to sell the euro with goals Senkou Span B line (1.1265) and the support level of 1.1238. Potential Take Profit in this case is from 40 to 70 points.