EUR/USD – 1H.
Hello, traders! On July 27, the EUR/USD pair continued the growth process for most of the day over two upward trend lines, which continue to maintain a "bullish" mood for traders. Only tonight, the pair performed a reversal in favor of the US currency and began a similar fall in quotes. Thus, within one or two days, the pair's quotes can perform a fall to the first trend line. The reasons for the fall of the currency pair may lie in the oversaturation of traders with purchases of the European currency. In Forex, this term is called "overbought". When a pair moves for a long time in one direction without a single correction, sooner or later, there comes a moment when the movement ends for no apparent reason. Yesterday, we did not witness any important event or report that could increase the interest of traders in the US dollar. There is still no optimistic news or reports coming from America. In Europe on Monday, everything was quiet and calm. The same information background will be available today. Traders can only count on new data on the US pandemic, on mass riots in the US, and the deterioration of China-US relations. But it was this news that brought the pair to the level of 1.1785.
EUR/USD – 4H.
On the 4-hour chart, the quotes of the EUR/USD pair made a consolidation above the corrective level of 127.2% (1.1729). Thus, the process of price growth can be continued in the direction of the next Fibo level of 161.8% (1.2024). Closing the pair's exchange rate under the Fibo level of 127.2% will work in favor of the US currency and begin to fall in the direction of the corrective level of 100.0% (1.1496). A bearish divergence has already been canceled by the time the quotes turn down.
EUR/USD – Daily.
On the daily chart, the EUR/USD pair made a consolidation above the Fibo level of 200.0% (1.1566). Thus, the growth process continues in the direction of the corrective level of 261.8% (1.1825), the rebound from which will work in favor of the US currency.
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair, after rebounding from the lower line of the "narrowing triangle", performed an increase to the upper line of the "narrowing triangle", which now allows you to count on rebounding from it (at the end of the week) and resuming the fall. Otherwise, the growth process will continue.
Overview of fundamentals:
On July 27, the US released reports on changes in the volume of orders for long-term goods. In general, I can't say that this report was significantly better than expected, so it did not cause purchases of the US currency
News calendar for the United States and the European Union:
On July 28, the calendars of economic events in the United States and the European Union are empty. Thus, the information background will be absent today, and the US dollar will have a small chance of continuing growth.
COT (Commitments of Traders) report:
The latest COT report, released on Friday, showed major changes in the mood of major market players. Changes that exceed or are close to 10,000 contracts are highlighted in green and red. As you can see, almost all the cells in the last report are colored green or red. Speculators (the "Non-commercial" group) actively increased long-contracts for the euro in the reporting week and at the same time getting rid of short-contracts (-8100). Commercial players (the "Commercial" group) entered the market with both purchases and sales of euros. Thus, in total, more than 80,000 new contracts were opened by all groups of traders during the reporting week. The activity of traders in the euro has increased significantly, and the "bullish" mood has remained.
Forecast for EUR/USD and recommendations to traders:
Today, I recommend buying a currency pair with a target of 1.2024, since the close was made above the level of 1.1729 with the stop-loss level at 1.1729. I recommend selling the pair if the quotes are fixed below the level of 1.1729 with the goal of 1.1496. But when selling, it should be understood that the trend remains "bullish" and a strong fall in the euro is not expected yet.
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.