Thoughts on the EUR this morning...
After momentarily surpassing the 1.17 handle on Tuesday and coming within an inch of clipping the underside of a H4 AB=CD 161.8% Fib extension at 1.1713 drawn from the low 1.1370, the single currency (influenced by a much higher-than-expected US consumer confidence report) turned aggressively lower.
What’s also notable from a technical perspective is that the daily candles recently connected with an upper channel resistance line extended from the high 1.1263, and chalked in a reasonably strong-looking daily selling wick.
While the above paints a somewhat bearish picture, there are two strong cautionary points to consider here:
1. Daily support at 1.1615 is hovering nearby current price.
2. Last week we saw a large weekly supply zone at 1.1533-1.1278 taken out, which had managed to stay intact since mid-May 2015! This suggests that overall the bulls are in control of things for the time being.
Our suggestions: Based on the above findings, our desk is watching the green H4 area marked at 1.16/1.1615 for potential long opportunities. The area is comprised of a psychological band at 1.16, a H4 38.2% Fib support level at 1.1606 pegged from the low 1.1479 and the daily support mentioned above at 1.1615.
To be on the safe side here, we’ve elected to wait for additional confirmation before pulling the trigger. Preferably, we want to see a full, or near-full-bodied H4 bull candle materialize from the said H4 buy zone. This, of course, will not promise a winning trade, but what it will do is display buyer intent from a high-probability reversal zone.
Data points to consider: US New home sales at 3pm, FOMC Statement and Fed funds rate at 7pm GMT+1.
Levels to watch/live orders:
• Buys: 1.16/1.1615 (waiting for a H4 bull candle to form before entering long is advised, stop loss: ideally beyond the candle’s tail).
• Sells: Flat (stop loss: N/A).
What’s also notable from a technical perspective is that the daily candles recently connected with an upper channel resistance line extended from the high 1.1263, and chalked in a reasonably strong-looking daily selling wick.
While the above paints a somewhat bearish picture, there are two strong cautionary points to consider here:
1. Daily support at 1.1615 is hovering nearby current price.
2. Last week we saw a large weekly supply zone at 1.1533-1.1278 taken out, which had managed to stay intact since mid-May 2015! This suggests that overall the bulls are in control of things for the time being.
Our suggestions: Based on the above findings, our desk is watching the green H4 area marked at 1.16/1.1615 for potential long opportunities. The area is comprised of a psychological band at 1.16, a H4 38.2% Fib support level at 1.1606 pegged from the low 1.1479 and the daily support mentioned above at 1.1615.
To be on the safe side here, we’ve elected to wait for additional confirmation before pulling the trigger. Preferably, we want to see a full, or near-full-bodied H4 bull candle materialize from the said H4 buy zone. This, of course, will not promise a winning trade, but what it will do is display buyer intent from a high-probability reversal zone.
Data points to consider: US New home sales at 3pm, FOMC Statement and Fed funds rate at 7pm GMT+1.
Levels to watch/live orders:
• Buys: 1.16/1.1615 (waiting for a H4 bull candle to form before entering long is advised, stop loss: ideally beyond the candle’s tail).
• Sells: Flat (stop loss: N/A).
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