Eyeing shorts on the EUR
Weekly gain/loss: - 103 pips
Weekly closing price: 1.0451
Weekly view: Motivated by the Fed’s decision to increase the benchmark interest rate 25 bps on Wednesday, the shared currency sustained further losses last week. This, as you can see, drove the pair deeper into a major support area chiseled in at 1.0333-1.0502, which can be seen stretching as far back as 1997. Despite the small end-of-week correction seen from last week’s candle, traders still need to be prepared for the possibility of further selling in the weeks ahead, given the dollar’s current position both technically and fundamentally. In the event of a breakdown through the current area, the next barrier in the spotlight falls in at 1.0138, a support level that also claims an impressive history.
Daily view: In conjunction with the weekly candles, the pair managed to catch a bid from just ahead of support coming in at 1.0360 going into the later hours of Thursday’s segment. On the grounds that this level is seen fixed within the aforementioned weekly support area, price could potentially rally from here to connect with resistance seen at 1.0520 sometime this week. Conversely, a sustained move below the current daily support could portend further selling down towards a demand area penciled in at 1.0205-1.0273, which happens to be located just below the weekly support zone.
H4 view: A quick recap of Friday’s trade on the H4 chart shows that following Thursday’s whipsaw through the 1.04 handle, the major managed to find a ledge to pull itself up to highs of 1.0473. Seen close by are two upside objectives (green rectangles). The first comes in at 1.0518/1.05, formed by a 50.0% Fib resistance level and a psychological boundary, as well as a resistance which lines up beautifully with the Fib line. Of particular interest here is also the fact that daily resistance at 1.0520 is located just 2 pips above this area! The second zone can be seen a little higher up around the mid-way resistance point at 1.0550. It boasts both a 61.8% Fib resistance line at 1.0554 and a trendline resistance extended from the low 1.0504.
Direction for the week: Although the dollar is in a relatively strong position at present, we feel the EUR may pullback this week, given the higher-timeframe structure in play. With that being said, our team believes that the market will struggle to sustain gains beyond the nearby daily resistance level at 1.0520, despite weekly price currently being surrounded by a weekly support area.
Direction for today: In view of the support established around the 1.04 region on Friday, additional upside could be on the cards today at least until the 1.05 base.
Our suggestions: Shorting from either of the two mentioned H4 areas highlighted above is valid, in our book. Nevertheless, one still needs to tread carefully here! We would not recommend selling here without the help of a lower-timeframe confirming sell signal. This could either be a break below demand followed by a retest, a trendline break/retest or simply a collection of well-defined selling wicks around the said zones. We search for lower-timeframe confirmation between the M15 and H1 timeframes, since most of our higher-timeframe areas begin with the H4. Stops are usually placed 3-5 pips beyond confirming structures.
Data points to consider: German ifo business climate report at 9am GMT.
Levels to watch/live orders:
• Buys: Flat (stop loss: N/A).
• Sells: 1.0518/1.05 (lower-timeframe confirmation required prior to pulling the trigger, stop loss: dependent on where one confirms the area). 1.0550 region (lower-timeframe confirmation required prior to pulling the trigger, stop loss: dependent on where one confirms the area).
Weekly closing price: 1.0451
Weekly view: Motivated by the Fed’s decision to increase the benchmark interest rate 25 bps on Wednesday, the shared currency sustained further losses last week. This, as you can see, drove the pair deeper into a major support area chiseled in at 1.0333-1.0502, which can be seen stretching as far back as 1997. Despite the small end-of-week correction seen from last week’s candle, traders still need to be prepared for the possibility of further selling in the weeks ahead, given the dollar’s current position both technically and fundamentally. In the event of a breakdown through the current area, the next barrier in the spotlight falls in at 1.0138, a support level that also claims an impressive history.
Daily view: In conjunction with the weekly candles, the pair managed to catch a bid from just ahead of support coming in at 1.0360 going into the later hours of Thursday’s segment. On the grounds that this level is seen fixed within the aforementioned weekly support area, price could potentially rally from here to connect with resistance seen at 1.0520 sometime this week. Conversely, a sustained move below the current daily support could portend further selling down towards a demand area penciled in at 1.0205-1.0273, which happens to be located just below the weekly support zone.
H4 view: A quick recap of Friday’s trade on the H4 chart shows that following Thursday’s whipsaw through the 1.04 handle, the major managed to find a ledge to pull itself up to highs of 1.0473. Seen close by are two upside objectives (green rectangles). The first comes in at 1.0518/1.05, formed by a 50.0% Fib resistance level and a psychological boundary, as well as a resistance which lines up beautifully with the Fib line. Of particular interest here is also the fact that daily resistance at 1.0520 is located just 2 pips above this area! The second zone can be seen a little higher up around the mid-way resistance point at 1.0550. It boasts both a 61.8% Fib resistance line at 1.0554 and a trendline resistance extended from the low 1.0504.
Direction for the week: Although the dollar is in a relatively strong position at present, we feel the EUR may pullback this week, given the higher-timeframe structure in play. With that being said, our team believes that the market will struggle to sustain gains beyond the nearby daily resistance level at 1.0520, despite weekly price currently being surrounded by a weekly support area.
Direction for today: In view of the support established around the 1.04 region on Friday, additional upside could be on the cards today at least until the 1.05 base.
Our suggestions: Shorting from either of the two mentioned H4 areas highlighted above is valid, in our book. Nevertheless, one still needs to tread carefully here! We would not recommend selling here without the help of a lower-timeframe confirming sell signal. This could either be a break below demand followed by a retest, a trendline break/retest or simply a collection of well-defined selling wicks around the said zones. We search for lower-timeframe confirmation between the M15 and H1 timeframes, since most of our higher-timeframe areas begin with the H4. Stops are usually placed 3-5 pips beyond confirming structures.
Data points to consider: German ifo business climate report at 9am GMT.
Levels to watch/live orders:
• Buys: Flat (stop loss: N/A).
• Sells: 1.0518/1.05 (lower-timeframe confirmation required prior to pulling the trigger, stop loss: dependent on where one confirms the area). 1.0550 region (lower-timeframe confirmation required prior to pulling the trigger, stop loss: dependent on where one confirms the area).
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