Forex Analysis & Reviews: 09.07.2020 - Hot forecast and trading...

09.07.2020 02:20 AM

Hot forecast and trading signals for the EUR/USD pair on July 9. COT report. Bulls do not retreat, will not give up. Push through the level of 1.1342 and the way up is open!

EUR/USD 1H

Buyers resumed their attack on the hourly timeframe on July 8 and returned the euro/dollar pair to the resistance area of 1.1326–1.1342. And at the time of writing, this area has yet to be overcome. The bulls clearly do not want to retreat and continue to make attempts to form a new upward trend. However, now there is also an ascending channel on the buyers' side. It was formed last week. Therefore, we now have a somewhat paradoxical situation at our disposal. On the one hand, the side channel takes place and is visible to the naked eye on the higher timeframes. On the other hand, the hourly chart has a pronounced ascending channel. And not a one-day channel, but a channel that originates on June 29. We can draw the following conclusions. Buyers continue to dominate the market, but their advantage is extremely weak and it is unknown whether it will be enough to overcome the area of 1.1326–1.1342. We do not recommend buying the euro currency as long as traders have not managed to overcome this area. At the same time, if a breakout occurs, along with the ascending channel, technical factors predicting further growth will be sufficient.

EUR/USD 15M

The lower channel of linear regression turned up on the 15-minute timeframe, but not overcoming the area of 1.1326–1.1342 can provoke a new round of corrective movement. We draw the attention of traders to the fact that the latest COT report showed a sharp reduction in the number of purchase contracts among professional traders. At the same time, the same category of traders (Commercial) actively purchased contracts for sale. Therefore, it could be assumed that their mood is changing towards a downward trend. However, we remind you that the total net position for this category of traders is now almost at +102,000. This means that Buy-contracts are 102,000 more than Sell. Moreover, it is not advised to trade on COT reports without technical support. They only show the mood of large traders.

The fundamental background for the euro/dollar pair has not changed at all in recent days. US President Donald Trump continues to work on his political rating and is going to open schools in September, despite the fact that the country is crossing the 3-million mark for coronavirus cases. Trump is going to introduce a new package of sanctions against Hong Kong and China, and has initiated the US withdrawal from the World Health Organization. None of this news could have a devastating impact on the US dollar. But the fact that the rate of increase in the spread of the epidemic in the United States is not decreasing, may well have a negative impact. At least we can see that sellers continue to remain "on the fence" and are in no hurry to return to the market. This means that either buyers need to get enough of their purchases and start closing them, or they need a fundamental background that will bring sellers back into the game. No high-profile macroeconomic events are planned for the last two trading days of the week in the United States and the European Union. The Eurogroup meeting may or may not provide some food for thought, since it is not a fact that the issue of a 750 billion euro recovery fund will be discussed during the meeting. And even if it is discussed, it is very unlikely that any decision will be made on it. This means that the bulls will have to push through the level of 1.1342 without the help of the foundation.

Based on all of the above, we have two trading ideas for July 9:

1) Buyers reached the area of 1.1326-1.1342 for the fourth time in the last month and again failed to close above it. Thus, we recommend buying the euro currency after overcoming this area, which will mean the continuation of the bullish trend, while aiming for the resistance levels of 1.1362 and 1.1422. Potential Take Profit is up to 80 points in this case.

2) The uptrend persists in the short term, as indicated by the upward trend channel. Thus, sellers are still waiting for their chance. Bears need to close below the channel, that is, to go below the Senkou Span B line (1.1267). 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.

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