Weekly gain/loss: +1.68%
Weekly closing price: 1.2428
Despite the end-of-week correction from highs of 1.2537, the euro put in another solid performance last week.
Registering its sixth consecutive weekly gain, the unit managed to advance more than 200 pips!
While this is an incredibly impressive run, we still have to take into account that weekly price concluded the week closing within the walls of a strong-looking weekly supply area at 1.2569-1.2287, along with monthly price on the US dollar index seen trading from support at 88.50. Not only this, but circling around the top edge of the weekly supply is a weekly Fibonacci resistance cluster (green lines):
• 61.8% Fib resistance at 1.2604 taken from the high 1.3993.
• 50.0% Fib resistance at 1.2644 taken from the high 1.4940.
• 38.2% Fib resistance at 1.2519 taken from the high 1.6038.
Moving down to the daily timeframe, we can see that a daily Quasimodo resistance level at 1.2495 elbowed its way into the spotlight on Thursday. The level – coupled with the weekly 38.2% Fib resistance at 1.2519 and noted weekly supply – prompted the daily candles to print two back-to-back daily selling wicks (also known as bearish pin bars). Key support from this point rests nearby at 1.2359. A break beyond here potentially sets the stage for a continuation move down to a daily support area coming in at 1.2246-1.2164.
A quick recap of Friday’s action on the H4 timeframe shows that the single currency recovered part of the losses that followed US President Trump’s comments regarding a strong dollar. H4 price bottomed at 1.2364 but lost momentum just ahead of the 1.25 handle. In the event that 1.24 is taken out today/early this week, this move could begin forming the D leg required for a H4 AB=CD pattern (black arrows) that terminates around the 127.2% Fib ext. point at 1.2318 (converges with a H4 trendline support drawn from the low 1.2165 and a round number at 1.23 ).
Market direction:
Given the weekly and daily resistances currently in motion, a breach beyond the 1.24 handle and daily support at 1.2359 is a reasonable possibility going forward.
A bounce from 1.23 is expected, however, in view of its surrounding H4 confluence. How much of a bounce, though, is difficult to judge since let’s remember that this area is positioned within weekly supply! In addition to this, keep in mind that psychological numbers such as 1.23 are prone to fakeouts. Therefore, entering long based on a pending order may not be the best path to take. Waiting for additional candle confirmation (buying tails/engulfing candles etc.) could be a safer approach.
Data points to consider: US core PCE price index m/m at 1.30pm GMT.
Weekly closing price: 1.2428
Despite the end-of-week correction from highs of 1.2537, the euro put in another solid performance last week.
Registering its sixth consecutive weekly gain, the unit managed to advance more than 200 pips!
While this is an incredibly impressive run, we still have to take into account that weekly price concluded the week closing within the walls of a strong-looking weekly supply area at 1.2569-1.2287, along with monthly price on the US dollar index seen trading from support at 88.50. Not only this, but circling around the top edge of the weekly supply is a weekly Fibonacci resistance cluster (green lines):
• 61.8% Fib resistance at 1.2604 taken from the high 1.3993.
• 50.0% Fib resistance at 1.2644 taken from the high 1.4940.
• 38.2% Fib resistance at 1.2519 taken from the high 1.6038.
Moving down to the daily timeframe, we can see that a daily Quasimodo resistance level at 1.2495 elbowed its way into the spotlight on Thursday. The level – coupled with the weekly 38.2% Fib resistance at 1.2519 and noted weekly supply – prompted the daily candles to print two back-to-back daily selling wicks (also known as bearish pin bars). Key support from this point rests nearby at 1.2359. A break beyond here potentially sets the stage for a continuation move down to a daily support area coming in at 1.2246-1.2164.
A quick recap of Friday’s action on the H4 timeframe shows that the single currency recovered part of the losses that followed US President Trump’s comments regarding a strong dollar. H4 price bottomed at 1.2364 but lost momentum just ahead of the 1.25 handle. In the event that 1.24 is taken out today/early this week, this move could begin forming the D leg required for a H4 AB=CD pattern (black arrows) that terminates around the 127.2% Fib ext. point at 1.2318 (converges with a H4 trendline support drawn from the low 1.2165 and a round number at 1.23 ).
Market direction:
Given the weekly and daily resistances currently in motion, a breach beyond the 1.24 handle and daily support at 1.2359 is a reasonable possibility going forward.
A bounce from 1.23 is expected, however, in view of its surrounding H4 confluence. How much of a bounce, though, is difficult to judge since let’s remember that this area is positioned within weekly supply! In addition to this, keep in mind that psychological numbers such as 1.23 are prone to fakeouts. Therefore, entering long based on a pending order may not be the best path to take. Waiting for additional candle confirmation (buying tails/engulfing candles etc.) could be a safer approach.
Data points to consider: US core PCE price index m/m at 1.30pm GMT.
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