EUR/USD 1H
The euro/dollar pair continued an indistinct upward movement on the hourly timeframe of July 21 for most of the day with frequent pullbacks and corrections. However, buyers sharply intensified and began new mass purchases of the European currency in the US trading session. It is difficult to say what exactly happened in America at this time, since the pound also began to firmly grew. Thus, it is hardly a matter of the results of the EU summit, which has nothing to do with the pound. Anyway, the upward trend continued, and traders managed to bring the pair to the resistance level of 1.1544, calmly overcoming the psychological level of 1.1500. Now we expect a round of downward correction. Bears' positions remain extremely unattractive, and the ascending channel clearly indicates an upward trend.
EUR/USD 15M
Both linear regression channels are directed upwards on the 15-minute timeframe, signaling an upward trend in the most short-term plan and no signs of an emerging trend change. According to the latest COT report, the non-commercial category of traders (the most important and significant) opened new 9,648 Buy-contracts and a total of 3,719 Sell-contracts during the reporting week. Thus, the net position in the non-commercial category has grown again and now stands at +112,124. And along with the net position, the bullish mood of traders has also increased. Both large and small. As a result, the European currency continues to grow against the US dollar and there are no prerequisites for completing this process yet. The last working days of the past week also ended with the euro's growth, so the new COT report, which will be released at the end of this week, can also show an increase in the number of Buy-contracts among non-commercial traders. The beginning of the current week is also left for buyers, although the euro has risen in price by minuscule values.
The fundamental background for the EUR/USD pair on Tuesday, we can say, was optimistic. The EU summit ended positively for the entire eurozone. And what is positive for the EU is positive for its currency. However, market participants were not overwhelmed with joy because of the results of the summit, considering them as a necessary decision that was still made. In fact, market participants who refused to make new purchases against the backdrop of the summit are right. After all, now the eurozone will only borrow 750 billion euros to restore the economy. But this 750 billion will have to be given away. And the EU countries will give them not only in the next few years, but up to 2058. At least this is the date that appears now. Thus, the EU has signed up not only itself, but also the next generations to pay back debts, so that now it has a chance to recover. As for ordinary macroeconomic reports, there were no releases in the first two trading days of the week. Neither in the US nor in the European Union. Thus, you are advised to pay more attention to the technical picture, and especially to the ascending channel. Publications or events are not planned in the EU and the United States on Wednesday, July 22. The US dollar may continue to fall in price if the coronavirus situation does not improve in the country.
Based on all of the above, we have two trading ideas for July 22:
1) Buyers clearly continue to dominate the market, and the price has gone even higher than the ascending channel. At the same time, the upward movement increased. Buy orders remain relevant with the target resistance levels of 1.1544 and 1.1631. Any of them can lead to a rebound and correction within the ascending channel. Potential Take Profit is up to 80 points in this case.
2) Bears are now simply resting and waiting for buyers to give them a chance to take the initiative in the market. Sellers still do not have enough strength to form a new downward trend. Thus, we can only wait for the price to consolidate below the Kijun-sen line, and ideally - below the ascending channel, and only then open sell positions with the support levels of 1.1335 and 1.1242. The potential Take Profit in this case is from 40 to 130 points.