EUR/USD 1H
The EUR/USD pair continued to move down on the hourly timeframe on June 19 and reached the support level of 1.1171 at both the end of the trading day and week. The euro/dollar continues to move strictly in the middle of the downward channel, not approaching its upper or lower line. At the same time, the upward trend line remains relevant, to which very little remains for traders. Sellers continue to put pressure on the European currency after two weeks of rest. Thus, the first trend line acts as an important line for bears (there is also a second one, much lower). If traders manage to overcome this line, then the chances of continuing the downward movement will significantly increase. Otherwise, we will expect correction first, and then price taking above the downward channel.
EUR/USD 15M
Both linear regression channels are still directed downward on the 15-minute timeframe, clearly signaling a downward trend in the shortest term. There are currently no signs of a possible turn up.
COT Report
The euro/dollar pair steadily rose until June 16 (the deadline, data for which is included in the latest COT report) and it only began a correction in the last two days. According to the COT report, professional traders were busy during the entire reporting week not with opening purchase contracts, which could be assumed based on the direction the pair was moving, but with closing sale contracts. Professional traders closed almost 20,000 sell contracts in just five days and opened 1,300 long euro contracts at the same time. Thus, the continued strengthening of the European currency was absolutely logical at that time. But, we emphasize that major market players are not buying the euro for the second week in a row, and therefore do not believe in the prospects of this currency. The euro grew for two weeks almost at the mere closure of contracts for sale by large speculators, which caused a skew of supply and demand for the euro. Accordingly, we believe that this week the dollar will continue to rise in price, and the new COT report will show a decrease in the net position in the euro.
The general fundamental background for the EUR/USD pair remains neutral, from our point of view. Over the course of two days off, of course, there were no important events in either the US or the EU. The general fundamental background remains quite controversial. If we take into account only economic factors, then both countries and both currencies remain approximately in the same position, since the crisis does not spare anyone. Political upheavals in the United States and the actions of Donald Trump are of great importance to what is called "the future", but in the short term they do not affect the market. You can take note of the speech of ECB Vice President Luis de Guindos on the first trading day of the week. However, we do not expect any important information from him, and there are no other planned events. Thus, an upward correction is possible. In general, we continue to believe that the bulls are saturated with the pair's purchases, all the more so, as the COT report shows, if they bought the euro, then obviously large market participants are not moving it. Even market participants who hedged their risks didn't very eagerly buy the euro in the reporting week. Thus, we cannot ascertain the growth in demand for the euro.
Based on the foregoing, we have two trading ideas for June 22:
1) The bulls continue to remain in the shade, so the EUR/USD pair may continue the downward movement. However, in the current conditions, it is imperative for the bears to overcome the upward trend line, then short positions can be continued to maintain support levels of 1.1088 and 1.0962 ( all targets will be specified today). Potential Take Profit after overcoming the trend line is from 50 to 180 points.
2) We recommend considering the option to resume the growth of the EUR/USD pair only when the bulls manage to gain a foothold above the descending channel, and at the same time the Senkou Span B and Kijun-sen lines, together with the resistance area 1.1326-1.1341. In this case, we advise you to buy with targets at resistance levels of 1.1380 and 1.1506 (these goals will also be specified). Potential Take Profit in this case is from 30 to 160 points.
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