Weekly view: Overall, the weekly timeframe still shows that the Euro is trending south, and has been for nearly a year now. Despite this, the weekly demand area seen at 1.0333-1.0502 has been able to support this market since mid-March. Last week’s trading did see a slight advance, but not really anything to get excited about since it has not really changed the overall structure of this timeframe. The outlook for this pair is still south in our opinion and will only change once/if a convincing push above weekly supply at 1.1449-1.1278 is seen.
Daily view: From the daily scale, we can see that price closed for the week (1.0865) just a stone’s throw away from a significant daily resistance zone at 1.1051-1.0918. This daily zone has managed to hold price lower on two occasions (26/03/15 – 06/04/15), therefore is an area that needs to be respected. Let’s see what the 4hr timeframe has to offer.
4hr view: The 1.0800 psychological number was clearly significant support for Friday’s sessions, which consequently saw prices whipsaw between this level and the 1.0900 hurdle above.
Today, and possibly into tomorrow will likely see further buying of the Euro currency. We believe this buying pressure will eventually break above 1.0900 to the 4hr supply area coming in at 1.0953-1.0922. This 4hr supply zone is extremely confluent in our opinion and is somewhere that we are very keen to look for confirmed shorting opportunities this week.
Reasons for considering a sell trade at the aforementioned 4hr supply area are as follows:
1. The round number 1.0900 will likely contain a ton of buy stops just above, from traders attempting to both fade and buy the breakout. Therefore, from a liquidity perspective – there will be plenty of buy orders available for well-funded traders to sell into.
2. Clean/fresh 4hr supply at 1.0953-1.0922.
3. Harmonic Gartley reversal zone – the 0.786 retracement positioned at the lower pink line at 1.0916, and the AB=CD completion located above at the upper pink line - 1.0985.
4. And finally, let’s not forget that this 4hr supply area is located within the aforementioned daily resistance zone.
The only grumble we have regarding the aforementioned 4hr supply zone is the buying pressure from the weekly demand area (see above) may push prices higher than expected, other than this, we believe this to be an A+ shorting setup. Targets will be different trader-to-trader, for us however, we’ll first be looking at 1.0900, once/if we manage to get below here, we’ll then look to 1.0800 as a first take-profit target.
Current buy/sell orders:
• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: 1.0953-1.0922 [Tentative – confirmation required] (Predicative stop-loss orders seen at: depends on where one confirms this area).