EUR/USD 1H
The euro/dollar pair calmly continued its upward movement in the afternoon and broke the last resistance level of 1.1631 on the hourly timeframe of July 24. Thus, buyers continue to confidently dominate the market, preventing sellers from even slightly adjusting the pair. At the same time, the quotes continue to move over the (!) ascending channel. That is, the upward movement is also increasing. Based on this, the bulls can continue to build up long positions today, since, in fact, nothing has changed over the weekend. Neither the fundamental background, nor the balance of power between bulls and bears. On the contrary, Friday ended three points off the high of the day (!!!), which means that buyers did not even think about closing part of the purchase orders banally in order to take part of the profit before the weekend, as it often happens in the currency market.
EUR/USD 15M
Both linear regression channels are directed upward on the 15 minute timeframe, signaling an upward trend in the short term and no signs of an emerging trend change. Well, the latest Commitments of Traders (COT) report showed a major change in favor of buyers. Professional traders (non-commercial category in the COT report) opened 9,500 new Buy-contracts during the reporting week (July 15-21) and at the same time (!!!) closed 8,000 Sell-contracts. Obviously, the net position for this category of large traders, which is the most important and it is believed that it drives the market, grew by 17,500 at once. However, this is until July 21st. And after July 21 ... the euro continued to rise in price. Consequently, non-commercial traders continued to ramp up their purchases of the euro and get rid of sales of this currency. Thus, even the COT report does not give us any reason to suppose the end of the upward trend. Even 36,000 Sell-positions opened by the commercial category of traders did not have much significance, only, that perhaps, they slightly slowed down the euro's growth.
The fundamental background for the EUR/USD pair was absolutely irrelevant on Friday. Business activity indices in services, manufacturing and composite indexes were published in the European Union, separately in Germany and in the United States. European indexes, all as one, exceeded their forecast values, but US indexes – were worse than traders' expectations. But in the first half of the day (when the European indices came out positive), the euro/dollar adjusted, and in the afternoon (when weak US indices were released ), the euro continued to appreciate. This is how market participants reacted to business activity. None, to be precise. Thus, we can only draw one conclusion on the fundamental background at this time. Traders continue to pay attention to the coronavirus epidemic in the United States, to the rallies and protests that continue in many American cities, to the inaction of the authorities in the first case and the powerlessness of the authorities in the second case, and continue to get rid of the US currency. We have already said that the process of increasing the euro's price can stop at any time, since the dollar can not constantly fall on these two factors. However, while all technical indicators on all timeframes continue to indicate a continuous upward movement, there is no point in trying to guess the downward turn and open short positions now.
Based on all of the above, we have two trading ideas for July 27:
1) Buyers continue to dominate the market. Longs remain relevant with a target volatility level of 1.1743. Thus, it is now recommended to either stay in purchases of the pair with the Stop Loss level below Kijun-sen, or open new longs with the goal of 1.1743, since the level of 1.1631 has been overcome. You can also open new longs on the up signal of some fast indicator, such as the Heiken Ashi. The potential Take Profit in this case is up to 80 points.
2) Bears are still resting and waiting for the bulls to give them at least a chance to take the initiative in the market. Thus, they can only wait for the price to be consolidated at least below the Kijun-sen line(1.1529). In this case, you can try to sell the pair with the goal of the lower line of the ascending channel. You are advised to consider more serious sales after consolidating the price below the ascending channel with the goal of the Senkou Span B line (1.1362). The potential Take Profit in this case is up to 80 points.