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EUR/USD 1H
The EUR/USD pair resumed its downward movement on the hourly timeframe on June 16 after a rather strong growth on Monday. Thus, we can conclude that the downward trend persists, although it remains rather weak. We continue to expect a significant drop in the European currency, considering that the previous growth was, to put it mildly, not too justified. In recent days, a downward channel has been formed, which now provides support to the traders who expect a fall. Yesterday, the pair failed to gain a foothold above the resistance area of 1.1327-1.1341, which also helped the bears to resume sales. At the moment, the quotes of the pair fell to the Senkou Span B line, and in addition to the descending channel, two more upward trend lines remain in force. Thus, we believe that the downward movement will continue, at least to the first trend line, which lies near the support level of 1.1171. Further prospects for sellers will depend on overcoming this line.
EUR/USD 15M
The higher linear regression channel turned up again on the 15-minute timeframe, and the lowest turned down again. Thus, we are now witnessing an entry to forming a new downtrend from the pair.
COT Report
The European currency continued to rise in price for most of the past week. Thus, we made assumptions that professional market players have invested in the euro, respectively, according to the latest COT report, the number of buy positions should have seriously increased. Or the number of contracts for selling the euro will seriously decrease. As a result, the report showed that the first option was implemented. The number of open buy positions increased by 12,662, while sales contracts were also reduced by professional traders (-2,579). Thus, even a double effect was obtained. As for the general changes among all categories of traders in the COT report, it is the number of sell deals that has grown over the past week. However, as we all perfectly understand, speculators drive the market, and accordingly, it is their actions that interest us first of all. The trend is already different this week. Speculators stopped opening new contracts for the purchase.
The general fundamental background for the EUR/USD pair remains neutral, from our point of view. Quite important messages and macroeconomic reports are regularly received from the United States and the European Union. However, unfortunately, traders continue to ignore most of the macroeconomic statistics because in the EU and in the US the economic picture is now about the same. Both there and there, the economy is experiencing serious problems due to the coronavirus crisis, so the next drop in any indicator does not cause shock for market participants, because competitors have no better indicator. The top officials of the EU and the US, all but Donald Trump, continue to give out very pessimistic comments about the economic recovery after the crisis. Yesterday, Federal Reserve Chairman Jerome Powell, speaking to the Banking Committees of the US Congress, said that much will depend on whether the coronavirus is completely defeated and when it happens. According to Powell, complete restoration can not be done without this. On the one hand, the comments of the Fed chairman cannot be called optimistic, but the greenback was in demand yesterday at the US trading session. At a time when there was no other important news. Today's important events include inflation in the EU and Powell's second speech in the Congress. However, inflation in recent months has ceased to be an important indicator for market participants, and the content of Powell's second speech will most likely be the same as the first.
Based on the foregoing, we have two trading ideas for June 17:
1) So far, the bulls have released the initiative from their hands, so the pair could continue the downward movement. Therefore, after overcoming the Senkou Span B line, we recommend selling the pair again with the goal of the support level of 1.1171. If sellers succeed in overcoming the trend line, then sales will be supported with targets at support levels of 1.1088 and 1.0962. Potential Take Profit range from 70 to 280 points.
2) We recommend considering the option of resuming the pair's growth if the bulls manage to return to the area above the critical Kijun-sen line, as well as above the resistance area 1.1327-1.1341 and, as a result, after consolidating above the downward channel. Then we will recommend buying the euro again with targets at the resistance levels of 1.1380 and 1.1506. Potential Take Profit in this case is from 30 to 160 points.
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