FX.co ★ EUR/USD: plan for the American session on July 19 (analysis of morning deals). Euro buyers don't give up

I emphasized the 1.0224 level in my morning forecast and advised making entry decisions there. Let's analyze the 5-minute chart to see what occurred. The strengthening of the euro due to rising inflationary pressure in the region caused an update to the resistance at 1.0224 and the construction of a fake breakdown there. The sell signal did not materialize, as there was afterward a breakout and a top-to-bottom retest of the level 1.0224. It allowed us to reduce our short positions to zero and start new long bets to continue the bull market. As a result, the pair increased by 40 points and reached 1.0271, the level of resistance.

To open long positions on EURUSD, you need:

In the early half of the trading day, the euro rose as it became clear that the European Central Bank would need to act more aggressively to combat the highest inflation in the eurozone in decades. European lawmakers could soon discuss a more aggressive initial increase in interest rates, bolstering the euro even further. Today, during the US session, statistics on the number of construction permits issued in the US and the volume of new house development are revealed, which is unlikely to provide much support for the US dollar. However, recent precedent indicates that even positive reports do not result in a pair's decline. If EUR/USD falls lower against a pullback after the data, buyers will have to defend the new support at 1.0195 that was created at the end of the first half of the trading day. Only after the development of a false breakdown can we anticipate ongoing growth and an update of the nearest resistance level of 1.0271. A breakout and a top-down test of this range, similar to what I indicated previously, will trigger stop orders, signaling the entry of long positions with the potential for a greater gain to 1.0321. Intraday speculative traders will likely begin exiting the market at this price, limiting the pair's upside potential. I advocate taking profits near the vicinity of 1.0374 as a more distant objective. If EUR/USD drops and there are no buyers at 1.0195 in the afternoon, the euro will be subject to renewed pressure. In this case, I suggest you not hurry into the market: the greatest opportunity for initiating long positions will be a false breakdown in the region of 1.0127, where bullish moving averages are in play. I recommend purchasing EUR/USD immediately for a comeback only from the level of 1.0082, or even lower - around 1.0045, with the objective of a higher 30-35-point intraday correction.

To open short positions on the EURUSD, you must have:

Strong inflation has once again shackled euro sellers, who are in no rush to return to the market, as evidenced by a relatively simple breach of this week's highs and the pair's continued appreciation. Do not forget, however, that in recent months, more and more US Central Bank representatives have hinted that the committee may choose a more aggressive hike in interest rates, although there is no mention of a 1 percent increase. The meeting is already scheduled for the following week. Therefore all observed upward progress may cease before the meeting ever begins. If EUR/USD continues to rise in the afternoon following the release of weak economic data from the United States, the formation of a false breakdown at 1.0271 is an excellent signal to open short positions with the expectation of EUR/USD falling to the strategic support level of 1.0195. A breakdown and consolidation below this range, as well as a reverse test from the bottom up, will result in an additional sell signal with the destruction of buyers' stop orders.

Moreover, a larger pair movement down to the area of 1.0127 will significantly impact speculative traders who expect the pair to remain near its previous highs. Fixing below 1.0127 is a clear path to 1.0082 when I advocate abandoning all sales positions. The zone of 1.0045 will serve as a more distant objective. If EUR/USD moves higher during the American session and there are no bears at 1.0271, you should postpone short positions until 1.0321, which offers more enticing resistance. Only the construction of a fake breakdown there will be the starting point for selling the euro. Short positions can be reopened immediately from the maximum of 1.0374, or even higher – around 1.0437, aiming for a 30-35-point correction below.

The COT report (Commitment of Traders) for the 12th of July revealed an increase in both long and short holdings, but the increase in short positions was significantly larger, indicating that pessimistic sentiment in the market persists. It also resulted in a larger negative delta, as fewer people are ready to purchase even at present lows. It is due to the robust figures for the United States, where the growth of inflation and retail sales contributed to maintaining a bullish mood against the US currency and a further decline in demand for risky assets. The dollar will increase until the Federal Reserve raises interest rates. A very significant report on inflation in the eurozone is anticipated in the near future, which may indicate another spike in price growth. If this occurs, you should not be shocked by a small upward adjustment of the pair, but it is unlikely to prevent a renewed slide and another test of the dollar's parity with the euro. The COT report reveals that long non-commercial positions climbed by only 102 to 197,240, while short non-commercial positions increased by 8,494 to 222,484. Despite the low exchange rate of the euro, the necessity for additional aggressive policy on the part of central banks, and the recession in many industrialized nations, dollar purchases remain strong. At the end of the week, the total non-commercial net position remained negative at -25,244 compared to -16,852. The weekly ending price fell to 1.0094 from 1.0316.

Signals of indicators:Moving AveragesTrading occurs above the 30-day and 50-day moving averages, indicating the euro's ongoing ascent.Note: The author considers the time and prices of moving averages on the hourly chart H1, which differs from the conventional definition of daily moving averages on the daily chart D1.Bollinger BandsThe average boundary of the indicator around 1.0175 will act as support should the pair drop.Description of indicators

• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
• MACD indicator (Moving Average Convergence / Divergence - moving average convergence/divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-profit speculative traders, such as individual traders, hedge funds, and large institutions use the futures market for speculative purposes and to meet certain requirements.
• Long non-commercial positions represent the total long open position of non-commercial traders.
• Short non-commercial positions represent the total short open position of non-commercial traders.
• Total non-commercial net position is the difference between the short and long positions of non-commercial traders.