16.07.202008:04 Forex Analysis & Reviews: EUR/USD: plan for the European session on July 16 (analysis of yesterday's trade). Euro buyers retreat from the market ahead of ECB meeting, EU summit. COT reports. Bulls need to return resistance 1.1419

To open long positions on EUR/USD, you need:

Yesterday's data on industrial production in the US reminded traders of the recovery of the US economy and returned the dollar's appeal, which has been losing ground against the euro all week amid expectations that the EU leaders will support the European Commission's proposed 750 billion euro bailout plan. But the first thing to do today is to wait for the European Central Bank's decision on monetary policy as well as the speech of ECB President Christine Lagarde. From a technical point of view, nothing has changed compared to yesterday, except a new resistance of 1.1453 has formed. The buyers' initial target is still the resistance of 1.1419, which they were unable to keep yesterday afternoon and is clearly visible on the 5-minute chart. Consolidating above this level will be a new signal to open long positions, which can lead to a high of 1.1453, where I recommend taking profits. The 1.1485 area is still the long-term goal, its breakout will lead to testing the 15th figure and updating the high of 1.1514. But do not forget that the decisions taken at the ECB meeting could put negative pressure on the euro, so the desire of investors to increase long positions at current highs will be limited. A more optimal scenario for buying EUR/USD, especially in view of tomorrow's start of the EU summit, will be a downward correction to the support area of 1.1363, from where you can open long positions immediately for a rebound based on 20-25 points of correction. If bulls are not active in this range, it is best to wait until the low of 1.1307 has been updated and buy EUR/USD there. It is also worth remembering that the Commitment of Traders (COT) report for July 7 recorded an increase in long positions and a very small rise in short ones, which indicates a gradual increase in demand for risky assets. There are more and more people who want to buy euros in the current conditions and at high prices. The report shows an increase in short non-commercial positions from the level of 81,432 to the level of 81,562, while long non-commercial positions jumped from the level of 180,387 to the level of 185,159. As a result, the positive non-commercial net position increased to 103,597, against 98,955, which indicates an increase in interest in purchasing risky assets at current prices.

To open short positions on EUR/USD, you need:

Sellers coped with the task yesterday and managed to return the pair under the level of 1.1419 by the end of the day. However, this is likely due to euro buyers taking profits before important economic events. The main task of the bears for the first half of the day is to form a false breakout in the resistance area of 1.1419, which may happen after fundamental data on eurozone countries have been released. This will force speculative buyers of the euro to further consolidate long positions, which in turn will lead to a downward correction to the support area of 1.1363, where the main struggle for direction will unfold. Consolidating below this level will increase pressure on the euro and lead to a break in the upward trend, which will be an additional signal to sell with the main goal of returning to the level of 1.1307, where I recommend taking profits. If there is no activity from the bears at the level of 1.1419, it is best not to rush to sell against the trend, but wait for an update of new highs in the area of 1.1453 and 1.1485, counting on a correction of 30-40 points within the day.

Indicator signals:

Moving averages

Trading is conducted in the area of 30 and 50 moving averages, which indicates the probability of ending the bullish trend and locking the pair in a side channel before a number of important fundamental statistics.

Note: the period and prices of moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger Bands

Breaking the upper limit of the indicator in the area of 1.1445 will cause the euro to grow. A break in the lower border around 1.1400 will increase the pressure on the pair.

Description of indicators

• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
• MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Fast EMA period 12. Slow EMA period to 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-commercial traders are speculators, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
• Long non-commercial positions represent the total long open position of non-commercial traders.
• Short non-commercial positions represent the total short open position of non-commercial traders.
• The total non-commercial net position is the difference between short and long positions of non-commercial traders.