Monthly timeframe:
Brought forward from previous analysis –
Despite a healthy attempt at recovery from demand at 1.0488/1.0912 in October 2019 – a particularly noteworthy area given the momentum derived from its base – EUR/USD failed to sustain gains, and had the unit retesting its upper boundary last week.
Although down 2.30% on the month and in-line with the primary downtrend, we cannot rule out the possibility of fresh upside attempts from current demand. Additional structure worth noting on the monthly timeframe is demand-turned supply at 1.1857/1.1352 and a reasonably ‘fresh’ demand area coming in at 0.9581/1.0221.
Daily timeframe:
Partially altered outlook from previous analysis –
Since retesting supply at 1.1117/1.1078, the unit has retained a strong underlying offer, consuming a demand zone at 1.1001/1.0946 and dethroning the 1.0879 October 1st low.
Continued downside from here is a possibility, which would draw demand at 1.0680/1.0781 to surface (formed April 2017 – houses a 127.2% Fibonacci ext. point within at 1.0724).
The RSI is seen attempting to bottom off 22.50ish out of oversold territory. Note, we’re also coming from RSI channel support.
H4 timeframe:
Demand at 1.0832/1.0877 continues to echo a fragile tone, having its lower edge absorbed Friday and tested further on Monday.
Channel support-turned resistance (1.1034 – yellow) also continues to cap upside since giving way early last week. Should sellers strengthen their grip here, the next area of interest falls in reasonably close by, albeit not visible on the chart, at demand from 1.0738/1.0774.
Another area of interest is a local supply zone at 1.0890/1.0870. Though with sell stops under pressure beneath the current demand, its unlikely price will reach 1.0890/1.0870 in the next few sessions.
H1 timeframe:
Monday observed a light economic calendar, with US banks also closing in observance of Presidents' Day. Earlier in the session, however, the Bundesbank warned German exporters were likely to suffer due to the outbreak of the coronavirus. The Bundesbank described the deadly virus, which has already claimed 1,770 lives in China alone, as a cyclical downside risk for Germany. Despite this, the comments failed to generate a market reaction, with EUR/USD trading within the confines of Friday’s range between 1.0861/1.0827.
Technical developments, on the other hand, had price gripping the underside of the 50-period SMA, forming what appears to be a descending triangle pattern from 1.0861/1.0829 – a bearish formation that usually forms during a downtrend as a continuation pattern. Support can be seen between the 1.08 handle and a 127.2% Fibonacci ext. at 1.0813.
The RSI’s current ascending channel remains in motion, with the indicator seen holding beneath the 50.0 point.
Direction:
Longer term, we could eventually see a rebound higher from monthly demand at 1.0488/1.0912, as underlined in Monday’s technical report. However, owing to daily price displaying scope to test demand at 1.0680/1.0781, a dip lower may be seen before any serious buyers step in.
Shorter-term focus has H4 demand at 1.0832/1.0877 weak, and H4 channel support-turned resistance refusing to give way. Intraday selling opportunities, therefore, could be seen should a H1 breakout below the current descending triangle form, with an initial downside target around the 1.08 handle, followed by the top edge of daily demand at 1.0781. Together, these two levels not only provide a solid take-profit target for shorts, it is also a zone worthy of a potential countertrend trade.
Brought forward from previous analysis –
Despite a healthy attempt at recovery from demand at 1.0488/1.0912 in October 2019 – a particularly noteworthy area given the momentum derived from its base – EUR/USD failed to sustain gains, and had the unit retesting its upper boundary last week.
Although down 2.30% on the month and in-line with the primary downtrend, we cannot rule out the possibility of fresh upside attempts from current demand. Additional structure worth noting on the monthly timeframe is demand-turned supply at 1.1857/1.1352 and a reasonably ‘fresh’ demand area coming in at 0.9581/1.0221.
Daily timeframe:
Partially altered outlook from previous analysis –
Since retesting supply at 1.1117/1.1078, the unit has retained a strong underlying offer, consuming a demand zone at 1.1001/1.0946 and dethroning the 1.0879 October 1st low.
Continued downside from here is a possibility, which would draw demand at 1.0680/1.0781 to surface (formed April 2017 – houses a 127.2% Fibonacci ext. point within at 1.0724).
The RSI is seen attempting to bottom off 22.50ish out of oversold territory. Note, we’re also coming from RSI channel support.
H4 timeframe:
Demand at 1.0832/1.0877 continues to echo a fragile tone, having its lower edge absorbed Friday and tested further on Monday.
Channel support-turned resistance (1.1034 – yellow) also continues to cap upside since giving way early last week. Should sellers strengthen their grip here, the next area of interest falls in reasonably close by, albeit not visible on the chart, at demand from 1.0738/1.0774.
Another area of interest is a local supply zone at 1.0890/1.0870. Though with sell stops under pressure beneath the current demand, its unlikely price will reach 1.0890/1.0870 in the next few sessions.
H1 timeframe:
Monday observed a light economic calendar, with US banks also closing in observance of Presidents' Day. Earlier in the session, however, the Bundesbank warned German exporters were likely to suffer due to the outbreak of the coronavirus. The Bundesbank described the deadly virus, which has already claimed 1,770 lives in China alone, as a cyclical downside risk for Germany. Despite this, the comments failed to generate a market reaction, with EUR/USD trading within the confines of Friday’s range between 1.0861/1.0827.
Technical developments, on the other hand, had price gripping the underside of the 50-period SMA, forming what appears to be a descending triangle pattern from 1.0861/1.0829 – a bearish formation that usually forms during a downtrend as a continuation pattern. Support can be seen between the 1.08 handle and a 127.2% Fibonacci ext. at 1.0813.
The RSI’s current ascending channel remains in motion, with the indicator seen holding beneath the 50.0 point.
Direction:
Longer term, we could eventually see a rebound higher from monthly demand at 1.0488/1.0912, as underlined in Monday’s technical report. However, owing to daily price displaying scope to test demand at 1.0680/1.0781, a dip lower may be seen before any serious buyers step in.
Shorter-term focus has H4 demand at 1.0832/1.0877 weak, and H4 channel support-turned resistance refusing to give way. Intraday selling opportunities, therefore, could be seen should a H1 breakout below the current descending triangle form, with an initial downside target around the 1.08 handle, followed by the top edge of daily demand at 1.0781. Together, these two levels not only provide a solid take-profit target for shorts, it is also a zone worthy of a potential countertrend trade.