EUR/USD – 1H.
Hello, traders! The EUR/USD pair was quite active on July 16. Over the past day, the pair has shown both the growth process and the fall process, eventually securing under the first trend line, which increased the probability of further fall in the direction of the second trend line. Yesterday was quite a busy day in terms of information. The main event of the day - the ECB meeting and its results - was a bit disappointing. The European Central Bank has not adopted any changes in monetary policy. Rates remained unchanged, as did the quantitative stimulus program and the pandemic crisis response program. Thus, traders did not have much to react to. Christine Lagarde's speech was also not particularly informative. The ECB President noted positive developments in the economy and economic activity in recent months, when quarantine measures were relaxed. At the same time, Lagarde noted complete uncertainty about the future of the economy, since if the virus begins to attack again, it is possible that it will have to tighten the quarantine again. As a result, the euro initially rose, probably expecting optimism from the ECB Chairman, and when it did not receive it, it began to fall.
EUR/USD – 4H.
On the 4-hour chart, the quotes of the EUR/USD pair performed a reversal in favor of the US currency and began the process of falling in the direction of the corrective level of 76.4% (1.1294) and the upward trend line. The rebound of quotes from this level or line will allow traders to count on a reversal in favor of the EU currency and the resumption of the growth process in the direction of the corrective level of 100.0% (1.1496). Closing the pair's exchange rate below the trend line will increase the probability of a further fall in the direction of the Fibo level of 61.8% (1.1167), and also change the mood of traders to "bearish".
EUR/USD – Daily.
On the daily chart, the EUR/USD pair performed an increase to the corrective level of 161.8% (1.1405). The pair's rebound from this Fibo level will allow traders to expect a reversal in favor of the US currency and the beginning of a fall in the direction of the corrective level of 127.2% (1.1261). Closing above it will increase the chances of continuing growth towards the next corrective level of 200.0% (1.1566).
EUR/USD –Weekly.
On the weekly chart, the EUR/USD pair rebounded from the lower line of the "narrowing triangle", which still allows traders to expect growth in the direction of the 1.1600 level (the upper line of the "triangle"). Several charts allow for possible growth in the direction of 1.1500 (1.1600).
Overview of fundamentals:
On July 16, the European Union held only the summing up of the meeting of the European Central Bank. In America, on this day, a report on retail trade (+7.5% m/m) was released, which was better than traders' expectations, and a neutral report on applications for unemployment benefits.
News calendar for the United States and the European Union:
EU - consumer price index (09:00 GMT).
US - consumer sentiment index from the University of Michigan (14:00 GMT).
On July 17, the European Union will release an early morning report on inflation, which is unlikely to seriously interest traders. Thus, the background information in the course of the day may be weak.
COT (Commitments of Traders) report:
The latest COT report showed exactly the changes in the mood of traders that I expected to see. The first thing to note is the growth of long-contracts by the "Non-commercial" group and a much smaller number of open short-contracts. Thus, speculators in the reporting week looked in the direction of purchases of the British. However, the "Commercial" group, on the contrary, increased short-contracts, and in total the greater number belongs to short. However, the first group of traders is still more important. And the trend, if you look at the upper half of the illustration, is clearly "bullish". At the beginning of April, there were 161 thousand contracts in the hands of speculators, now - 186 thousand.
Forecast for EUR/USD and recommendations to traders:
Today, I recommend waiting for new buy signals, such as a break from the trend line on the 4-hour chart. In this case, we buy a pair with the goal of 1.1496. I recommend selling the pair if the quotes close below the trend line on the 4-hour chart with a target of 61.8% (1.1167).
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but to ensure current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.