EUR/USD 1H
The euro/dollar pair broke the scenario that we expected on the hourly timeframe of August 5 and also implied that a new downward trend will form. Instead, the bulls became active again and started active purchases of the euro. The pair has not managed to overcome the support area of 1.1702-1.1727, and so at the moment we can state the resumption of the upward trend. However, not everything is so simple. The upward movement has ended near the resistance level of 1.1911. So now bulls need to overcome this level in order to satisfy their ambitions with that in the near future. A new round of downward correction will begin without this, and at most a new downward trend will begin.
EUR/USD 15M.
Both channels turned back up on the 15-minute timeframe, so now we can talk about the absence of any signs of a new downward trend emerging. The latest Commitments of Traders (COT) report showed a significant increase in bullish sentiment among major traders. The category of non-commercial traders opened 36,000 new Buy-contracts during the reporting week (July 22-28). This category has opened only 3,700 Sell-contracts. Thus, the net position (the difference between purchases and sales) increased by 32,000, which indicates a sharp strengthening of the bullish mood. However, this was obvious even without the COT report, since the euro continued to grow non-stop over the past four weeks. As for other categories of traders, their actions in the currency market do not matter much now. Mostly commercial traders opened Sell positions, which did not affect the pair's chart in any way. The most interesting thing now is what will be the actions of professional traders according to a new report that will be released this Friday. The euro began to decline at the beginning of the trading week and it even seemed that a downward trend would begin now. However, on Wednesday, the pair recovered all the losses of the previous days and reached its local and at the same time two-year highs around $1.19. Thus, logically, the mood of professional traders should not have changed. Recall that the next COT report will include data for July 29-August 4. In other words, the rest of this week will not be counted in it.
The fundamental background for the EUR/USD pair remained unchanged on Wednesday. Several new discouraging statements by US President Donald Trump did not cause any market reaction, since participants have long been accustomed to unsubstantiated insinuations of the head of the White House. But there was a fairly important report from ADP in America, which showed that the labor market is recovering at a fairly slow pace. The number of employees in the private sector increased by only 167,000 in July, although traders expected 1.5 million. But fans of the US currency were pleased with the data on business activity in the US services sector. The Markit index was 50 in July (higher than forecasts), and the ISM index, which is considered more important, was 58.1 (higher than forecast). However, the US dollar just passed by these two positive reports. The greenback continued to fall during almost the entire trading day. There will be no important publications in America on Thursday, August 6. The report on applications for unemployment benefits is important, in our opinion, but it is unlikely that the same opinion is now held by the majority of market participants who continue to actively get rid of the dollar. There will be no significant publications in the European Union.
Based on all of the above, we have two trading ideas for August 6:
1) Buyers returned the initiative to their hands again and reached the 1.1911 level. Now, in order to continue making purchases, you need to wait for the price to consolidate above this level. Then we will recommend new purchases while aiming for the 1.2043 resistance level. The potential Take Profit in this case is about 100 points.
2) Bears failed to take their chances. Now the key level for them is the same 1.1911. The downward movement may resume if the bulls fail to overcome it. However, for greater confidence, we recommend waiting for the price to consolidate below the critical line (1.1803) and only then should you open the shorts with the first goal of the support area of 1.1702-1.1727. It is possible to make more sales after overcoming the Senkou Span B line (1.1667). The potential Take Profit in this case is about 50 points.
