EUR/USD
The euro/dollar pair rose to the resistance level of 1.1432 for the third time on the hourly timeframe on July 17, and buyers stopped near this mark and were unable to continue moving up. Thus, the bulls remain dominant in the market, but their strength over the past week was not enough to overcome the level of 1.1440. Based on this, we expect new attempts to continue the upward movement in the new week. The ascending channel continues to signal an upward trend, so now you are advised to only consider purchases of the euro. All support and resistance levels will be updated on Monday.
EUR/USD 15M
Both linear regression channels turned up again on the 15-minute timeframe, indicating an upward trend in the most short-term plan. Meanwhile, the next trading week has ended and we have a new COT report at our disposal. At the end of last week, we assumed that professional traders continued to buy the euro, which will be reflected in the new COT report. And so it turned out. The "non-commercial" category of traders (the most important) opened 9,648 new Buy contracts and a total of 3,719 sell contracts during the reporting week. Thus, the net position in the category of non-commercial traders has grown again and is now 195,890-83,766 = 112,124. There is a strong bullish interest in the euro currency. The last working days of the past week also ended with the euro's growth, so the new COT report, which will cover the time period until Tuesday, but will be released on Friday, may also show an increase in the number of Buy-contracts among non-commercial traders.
The fundamental background for the EUR/USD pair remained low on Friday. Some traders' hopes were linked on Thursday with the European Central Bank meeting and Christine Lagarde's speech. However, they were disappointed. No important decisions were made by the ECB, and the head of the central bank only mentioned general phrases at the press conference. The euro continued to trade near local highs, if not more expensive, in the hope that the EU summit will bring positive news. However, during the weekend, it was announced that no decisions were reached at the summit. During the two days of the summit, all the disputed questions remained unanswered, the meeting was extended to Sunday, but until Monday morning we only know that German Chancellor Angela Merkel gave a comment: "I am still not sure whether any solution will be found. We may not achieve any results today." Therefore, the optimism of European buyers was clearly going to decrease. The prospects for the euro are not very bright. We expect the single currency to fall again if the EU member states fail to agree on the budget for 2021-2027 and on the recovery fund after the coronavirus pandemic. So far, there are no technical signals for this, but we recommend keeping your finger on the pulse of the market and reacting to what is happening. Important macroeconomic publications will not be released either in the United States or in the EU on Monday, July 20. We will still be waiting for information about the negotiations between the leaders of the 27 EU countries.
Based on all of the above, we have two trading ideas for July 20:
1) Buyers continue to dominate the market, as quotes remain above the Kijun-sen line and inside the ascending channel. But at the same time, they failed to overcome the level of 1.1440. Thus, purchases remain relevant with the goal of 1.1494, but now you need to wait until the previous two local highs are updated to open them. The potential Take Profit in this case is about 55 points. The second target is the level of 1.1494.
2) Bears have not managed to overcome the Kijun-sen line or exit the ascending channel over the past week. Sellers do not have enough power to form a new downward trend. Thus, we recommend selling the pair, but not before consolidating the price below the Kijun-sen line, and ideally - after below the ascending channel, with the goals of the Senkou Span B line (1.1278) and the support level of 1.1238. The potential Take Profit in this case is from 50 to 90 points.