Trading Recommendations and Trade Analysis for EUR/USD on July 22. The Euro Continues to Struggle

The EUR/USD currency pair continued its "neither fish nor fowl" movements on Tuesday. Volatility was again low, and for the fourth consecutive week, the price is in a weak upward correction that borders on the concept of flat. We believe that the current movement should be regarded as a flat, as the euro spends most of its time within the horizontal channel of 1.1362-1.1461. Thus, after reaching the upper boundary of this channel, the movement towards the lower boundary has begun, which we have been observing for several consecutive days. Considering the weakness of the movements and the presence of a flat, we do not believe that any fundamental, macroeconomic, or geopolitical factors are currently influencing the market. Individual events may provoke a market reaction, but it is so weak that it is unclear whether it is market noise or a reaction. Yesterday in the Eurozone and Germany, the ZEW economic sentiment indexes were published, each exceeding forecasts. However, the euro fell throughout the day, and there was no reaction to these reports.

From a technical standpoint, the pair maintains a slight bullish bias, but effectively this trend is a flat. The price has returned to the horizontal channel of 1.1362-1.1461, and the upward movement in recent weeks has been so weak that it is hard to speak of it as a trend. In a flat, the Ichimoku indicator lines are weak. Volatility remains low.

On the 5-minute timeframe on Tuesday, two trading signals were formally created. Initially, the price bounced off the Senkou Span B line and then overcame it. However, there were almost no movements during the day, and the Ichimoku indicator lines in the flat have no strength. Opening positions with such volatility made no sense.

The latest COT report is dated July 14. The illustration on the weekly timeframe clearly shows that the net position of non-commercial traders remains bullish but has significantly decreased due to geopolitical events. Traders have been getting rid of the euro in favor of the US dollar in recent months. Donald Trump's policy has not changed, but the dollar has temporarily served as a "reserve currency." However, this process may have already come to an end.

We still do not see any fundamental factors for the strengthening of the euro, while there remain sufficient factors for the decline of the US dollar. The war in the Middle East has made the dollar super-attractive for a while, but when this factor reaches its "expiration date," everything will return to normal. And that expiration may already have passed. In the long term, the euro could fall as low as 1.08$ (the trend line), but the upward trend will still remain relevant. Over the past months of dollar growth, the pair has not moved significantly closer to this line. The positioning of the red and blue lines of the indicator indicates parity between bulls and bears. During the last reporting week, the number of long positions in the "Non-commercial" group increased by 6,900, while the number of shorts rose by 3,300. Consequently, the net position increased by 3,600 contracts over the week.

On the hourly timeframe, a corrective upward trend is forming within a two-month downward trend, which resembles a flat much more. The situation in the Middle East remains tense and is not improving. The market continues to ignore many factors in favor of the euro, causing the European currency to fail to show significant growth. However, in recent weeks, the dollar also has not been able to show growth. The market is simply stagnant and resting.

For July 22, we highlight the following levels for trading — 1.1234, 1.1274, 1.1362, 1.1461, 1.1536-1.1542, 1.1585, 1.1657-1.1666, 1.1750-1.1760, 1.1786, 1.1830-1.1837, as well as the Senkou Span B line (1.1417) and Kijun-sen (1.1437). The lines of the Ichimoku indicator may move during the day, which should be taken into account when determining trading signals. Do not forget to set a Stop Loss order to breakeven if the price moves in the right direction by 15 pips. This will protect against potential losses if the signal turns out to be false.

On Wednesday, there are no important events or publications scheduled in the Eurozone or the US, so we should probably not expect strong movements or the end of the flat today.

Today, traders may consider short positions with a target of 1.1362, as the price has settled below the Senkou Span B line. Long positions can be opened with targets of 1.1461 and 1.1480 if the pair bounces off the 1.1362 level.

Price levels of support and resistance are thick red lines around which the movement may end. They are not sources of trading signals.

The Kijun-sen and Senkou Span B lines are Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour timeframe. They are strong lines.

Extreme levels are thin red lines from which the price has previously bounced. They are sources of trading signals.

Yellow lines are trend lines, trend channels, and any other technical patterns.

Indicator 1 on the COT charts represents the size of the net position of each category of traders.