Shorts under 1.13 – bearish harmonic Bat in sight
EUR/USD:
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
April spent the best part of the month feasting on the top edge of demand from 1.0488/1.0912, squeezing out a Japanese hammer candlestick pattern, typically viewed as a bullish reversal signal.
May, as you can see, recovered off worst levels and wrapped up a few pips shy of monthly highs, with June extending gains and recently reconnecting with the lower ledge of supply at 1.1857/1.1352 (intersects with a long-term trendline resistance [1.6038]).
With reference to the primary trend, price has exhibited clear lower peaks and troughs since 2008.
Daily timeframe:
After eight days of one-sided traffic, sellers made a stance Friday topping a few pips ahead of a potential reversal zone (PRZ) derived from a harmonic bearish bat pattern (comprised of an 88.6% Fib ret level at 1.1395, a 161.8% BC projection at 1.1410 and a 161.8% Fib ext. level at 1.1462 [red oval]). It’s common to see traders sell PRZs and site protective stop-loss orders above the X point, in this case at 1.1495. Common targets fall in at the 38.2% and 61.8% Fib ret levels (derived from legs A-D) at 1.1106 and 1.0926, respectively.
In addition to the bearish configuration, the RSI indicator also entered into overbought terrain, currently fading peaks of 78.00.
H4 timeframe:
By way of a Japanese shooting star candlestick pattern, regarded as a bearish signal at peaks, upside slackened out of supply coming in at 1.1415/1.1376 and prodded lows at 1.1278, aided by a surprise US non-farm payrolls number which revealed 2.5 million jobs were added to the economy in May.
Price may continue to unwind at the beginning of the week, according to the H4 chart, as demand is not expected to make a showing until 1.1189/1.1158 (prior supply).
H1 timeframe:
Forged on the back of upbeat US job’s data, intraday candles tumbled through orders at the 1.13 level. Supported by local supply derived from 1.1344/1.1316, dips sub 1.13 early trade this week may have buyers and sellers square off at 1.1250, a level joining closely with channel resistance-turned support (1.0991). Technical studies also reveal the 100-period simple moving average approaching the underside of 1.1250.
With respect to the RSI oscillator, the value has remained healthy above the 50.00 level since late May.
Structures of Interest:
Long term:
Monthly supply at 1.1857/1.1352 coming into force, along with daily price capping gains ahead of a harmonic bearish bat pattern between 1.1462/1.1395, reflects a bearish climate heading into the new week.
Short term:
H4 appears set to sail lower levels this week after crossing paths with supply at 1.1415/1.1376, with demand at 1.1189/1.1158 in sight.
Buyers on the H1, nevertheless, may view the recent pullback as a buying opportunity, eyeing 1.1250 confluence as support. However, knowing monthly, daily and H4 timeframes exhibit scope to press lower, the reaction from 1.1250 might lack enthusiasm. As such, bearish themes under 1.13 could be the better path to explore at least until H4 demand at 1.1189/1.1158 makes a show.
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
April spent the best part of the month feasting on the top edge of demand from 1.0488/1.0912, squeezing out a Japanese hammer candlestick pattern, typically viewed as a bullish reversal signal.
May, as you can see, recovered off worst levels and wrapped up a few pips shy of monthly highs, with June extending gains and recently reconnecting with the lower ledge of supply at 1.1857/1.1352 (intersects with a long-term trendline resistance [1.6038]).
With reference to the primary trend, price has exhibited clear lower peaks and troughs since 2008.
Daily timeframe:
After eight days of one-sided traffic, sellers made a stance Friday topping a few pips ahead of a potential reversal zone (PRZ) derived from a harmonic bearish bat pattern (comprised of an 88.6% Fib ret level at 1.1395, a 161.8% BC projection at 1.1410 and a 161.8% Fib ext. level at 1.1462 [red oval]). It’s common to see traders sell PRZs and site protective stop-loss orders above the X point, in this case at 1.1495. Common targets fall in at the 38.2% and 61.8% Fib ret levels (derived from legs A-D) at 1.1106 and 1.0926, respectively.
In addition to the bearish configuration, the RSI indicator also entered into overbought terrain, currently fading peaks of 78.00.
H4 timeframe:
By way of a Japanese shooting star candlestick pattern, regarded as a bearish signal at peaks, upside slackened out of supply coming in at 1.1415/1.1376 and prodded lows at 1.1278, aided by a surprise US non-farm payrolls number which revealed 2.5 million jobs were added to the economy in May.
Price may continue to unwind at the beginning of the week, according to the H4 chart, as demand is not expected to make a showing until 1.1189/1.1158 (prior supply).
H1 timeframe:
Forged on the back of upbeat US job’s data, intraday candles tumbled through orders at the 1.13 level. Supported by local supply derived from 1.1344/1.1316, dips sub 1.13 early trade this week may have buyers and sellers square off at 1.1250, a level joining closely with channel resistance-turned support (1.0991). Technical studies also reveal the 100-period simple moving average approaching the underside of 1.1250.
With respect to the RSI oscillator, the value has remained healthy above the 50.00 level since late May.
Structures of Interest:
Long term:
Monthly supply at 1.1857/1.1352 coming into force, along with daily price capping gains ahead of a harmonic bearish bat pattern between 1.1462/1.1395, reflects a bearish climate heading into the new week.
Short term:
H4 appears set to sail lower levels this week after crossing paths with supply at 1.1415/1.1376, with demand at 1.1189/1.1158 in sight.
Buyers on the H1, nevertheless, may view the recent pullback as a buying opportunity, eyeing 1.1250 confluence as support. However, knowing monthly, daily and H4 timeframes exhibit scope to press lower, the reaction from 1.1250 might lack enthusiasm. As such, bearish themes under 1.13 could be the better path to explore at least until H4 demand at 1.1189/1.1158 makes a show.
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