EUR/USD 1H
The EUR/USD pair began to finally correct in the hourly timeframe on June 5. Nevertheless, since the pair's quotes went much higher than the ascending channel earlier, now they just returned to it. Thus, a correction is visible on the hourly chart, but no more. There is no talk of any change in trend. The immediate goal of the corrective movement is the lower line of the channel, near which the Kijun-sen line is located, which is critical. If these two barriers are overcome, then the bears will really be able to get involved in the fight and count on something serious. Recall that in addition to the upward channel, there are also two upward trend lines. Therefore, in the case of overcoming the upward channel, the price will aim for the first trend line.
EUR/USD 15M
The picture finally changed a bit on the 15-minute timeframe. The lowest linear regression channel turned down, so a correction began for the pair. If the higher channel also turns down, this will be a significant reserve for the beginning of a downward trend.
COT Report
The latest COT report showed what we did not expect to see. It turns out that professional traders did not increase purchase contracts during the reporting week, but closed contracts for sale in euros. Thus, the effect was similar. But market participants who use foreign exchange contracts for hedging risks and for operating activities frolicked for the reporting week. Opened new 20,000 contracts for the purchase and 30,000 contracts for the sale. As you can see, there was no effect from as much as +10000 thousand sales contracts. Thus, the situation was terrible. Despite the fact that the total number of net sales contracts increased by about 5,000, the euro showed the strongest growth. This further leads us to the idea that the euro's growth is somewhat random and may be completed in the near future.
The general fundamental background for the EUR/USD pair is fairly neutral. The macroeconomic background is still taken into account by traders insofar as, however, on Friday it can still be concluded that stronger than expected data from overseas supported the dollar. True, it can also be concluded that buyers simply recorded part of the profit at the end of the working week, which led to a pullback, but most importantly, the correction still began. No important publication of statistics in the EU and the US on Monday, just a report on industrial production in Germany. In general, traders will be interested in previous topics this week, which we will consider through the prism of technical analysis. The topic of the Cold War between China and the United States, the Federal Reserve meeting, the rallies and protests in the US, and the coordination of the EU countries on funding sources for a new package of assistance to the most affected segments of the economy from the coronavirus crisis. A Eurogroup meeting will also take place this week, during which the issue of financing the new Rescue Fund will be discussed. If the finance ministers of the EU member states again fail to come to an agreement and agree on all issues, Italy, Spain, Portugal and Greece will no longer receive any assistance for a certain period of time. The longer aid is delayed, the more severely the economies of these countries may suffer. This factor could potentially put pressure on the euro.
Based on the foregoing, we have two trading ideas for June 8:
1) It is possible for the EUR/USD pair to grow further with the goal of the resistance level of 1.1478. However, for this, the bulls need to continue to stay within the rising channel. Stop Loss levels can still be placed below the channel and gradually moved upward if the upward trend continues. A price rebound from the bottom of the channel or Kijun-sen line will be a signal to open new purchases. The potential Take Profit in this case is 180 points.
2) The second option involves pinning the EUR/USD pair under the ascending channel and under the Kijun-sen line, which will allow sellers to finally get involved in the game. In this case, you are advised to open sell positions with targets of 1.1147 (March 27 high) and 1.1045 (trend line). Potential Take Profit range from 90 to 200 points.
