Hourly chart of the EUR/USD pair
The first two trading days of the week passed in absolutely indistinct trades and movements in different directions. This happens from time to time in the forex market. If the GBP/USD pair spent several days in such a movement, after which it resumed its normal movement, then the euro only came to its senses yesterday in the afternoon. In fact, this situation means that traders could not decide in which direction to trade. At first glance, the EU summit is over, the European economy will be provided with financial assistance worth 750 billion euros, which will help Italy, Spain, Greece, Poland not collapse under the pressure of the coronavirus crisis. But traders never saw anything optimistic about this. And there is no more news, especially of an economic nature, at this time. Moreover, there won't be any on July 22. The calendar of macroeconomic events clearly indicates this. Therefore, we believe that the euro is not growing, but that the US dollar is getting cheaper (if one currency in a pair is growing, then the second one is getting cheaper; an upward movement is the growth of the first currency (EUR), downward movement is the growth of the second (USD)). The US dollar is falling for the same reasons that we have already announced earlier. Among them is the coronavirus epidemic, which could lead to a new slowdown in the American economy. Thus, the upward movement of the pair may continue, but it is rather problematic to work on signals now - they are often not processed properly.
Nevertheless, technical analysis gives traders the possibility of new sales, although they are somewhat countertrend (positions against the main movement of the pair are considered more risky than trend ones). We have built a narrowing channel with the upper line passing through the price peaks on March 30 and June 10, and the lower line passing through the lows on May 14 and July 10. As a result, when the upper line is reached (if it happens), a powerful movement down to the lower line of the channel could follow. The following scenarios are possible on July 22:
1) Buying the euro is still relevant, but we believe that opening them near the upper channel line is risky, especially after a long upward trend. We advise traders to re-consider buying the euro if the upper channel line is crossed.
2) The price can reach the upper channel line today, from which a rebound and a downward reversal of the pair is very likely. This could happen around the 1.1570 level. Therefore, traders will have a good opportunity to sell the pair near this level, however, we recommend waiting for a rebound from the channel line and not forgetting about Stop Loss (an order that will limit possible losses if the price does not go down). Take Profit order can be placed near the 1.1371 level (near the lower channel line).
Important speeches and reports (always contained in the news calendar) can greatly affect the movement of a currency pair. Therefore, during their exit, it is advised to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginners in the forex market should remember that every trade cannot be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.