EUR/USD 1H
Buyers made another attempt to continue forming an upward trend on the hourly timeframe on July 9, which, by the way, is visible only on small timeframes. A side channel is clearly visible on the four-hour chart and above, in which the euro/dollar pair has been trading in for a month. The high that is in favor of the bulls is the presence of a small upward bias in recent weeks, which is expressed by an ascending channel on the lower timeframe. However, buyers once again failed to confidently overcome the resistance area of 1.1326–1.1342 yesterday, and when their attempts were crowned with local success, an insurmountable barrier was found in the resistance level of 1.1362. Thus, the final rebound from this level sent the quotes to the lower border of the ascending channel, near which the fate of the pair will now be decided for the next few days and weeks. If buyers do not interfere in what is happening, the quotes will fall below the channel, which will mean a change in the trend to a downward one. Overcoming the Senkou Span B line will be a strong enough signal to open sales. Thus, the bears need to overcome the 1.1285–1267 area, and the bulls need to keep this area.
EUR/USD 15M
The lower channel of linear regression turned down on the 15-minute timeframe, which also signals a downward trend (now). However, the key levels and support areas are focused on the hourly timeframe, so it is more informative. Just yesterday, after analyzing the latest COT report, we mentioned that professional traders actively got rid of Buy-contracts and opened Sell-contracts during the reporting week. Therefore, a strong upward movement did not correspond to the nature of positions opened by professional players, who are considered to move the market in one direction or another. We assumed that the euro has few prospects for further growth, although, from a fundamental point of view, the single currency has some support. However, the markets are driven not by the foundation, but by traders, primarily large ones.
The fundamental background for the EUR/USD pair is now somewhat contradictory. On the one hand, the euro has recently had some support due to the high growth rates of COVID-2019 distribution abroad. However, in articles on fundamental analysis, we said that it is unlikely for the euro to go far on this factor alone. It is too early to say that the upward trend on the hourly chart is complete, but the first steps in this direction have been taken. At the same time, the US currency has few prospects for strong growth. As we have already mentioned, the coronavirus epidemic is not just a disease, it is a pandemic that has caused the most serious crisis in recent decades. Thus, if the pandemic continues to develop in the United States, the country's economy will not recover, despite any assurances from US President Donald Trump that there will already be a serious recovery in the third and fourth quarters of 2020, and "2021 will be a great year for the American economy." So far, everything is going to the fact that the US economy will experience another lockdown or partial quarantine, since quarantine measures have already been tightened in some states, and the total number of cases of the disease has exceeded three million.
Based on all of the above, we have two trading ideas for July 10:
1) Buyers reached the area of 1.1326-1.1342 for the fifth time in the last month and have once again failed to confidently overcome it and leave it behind. Thus, we recommend buying the euro only if the bulls keep the initiative in their hands, the pair will remain inside the ascending channel, and later it will be possible to gain a foothold above the area of 1.1326–1.1342. In this case it will be possible to open purchases with the goals of 1.1362 and 1.1422. Potential Take Profit is up to 80 points in this case.
2) Since the bears have not yet managed to leave the ascending channel, it is too early to open Sell positions. We recommend waiting for the moment when traders will be able to pin the pair below the Senkou Span B line(1.1267), which will automatically mean overcoming the channel. In this case, the bulls will give the initiative to the bears, and we recommend selling the pair with targets at 1.1228, 1.1186 and 1.1126. The potential Take Profit in this case is from 20 to 130 points.
