Weekly outlook on the Euro

FX:EURUSD   Euro / U.S. Dollar
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Weekly Timeframe: Last week began relatively strong as the Euro forced the Dollar into a weekly supply area coming in at 1.1678-1.1458. Despite this, weakness began to be seen once the NFP reported that employment numbers were stronger than expected, and thus caused the Euro to sell off forming a strong selling wick into the close (1.1312).

Daily Timeframe: Last week’s action on the daily timeframe suggests that there was indecision in the market even with the positive U.S employment numbers being released. Price was seen boxed between a daily decision-point supply area visible at 1.1678-1.1540 (located deep within the aforementioned weekly supply area), and a small, yet clearly active daily demand area coming in at 1.1260-1.1318.

4hr Timeframe: Much like the daily timeframe , the 4hr timeframe also indicates price consolidation is present. From Tuesday onwards, trading took place between 1.1311 (located around the aforementioned daily demand area) and 1.1490. So, with the above in mind, what do we see happening today and possibly into the week?

Given that the weekly timeframe shows active selling from weekly supply (1.1678-1.1458) at the moment, we naturally feel more biased to shorts. However, for further downside to be seen, the sellers must take out both the lower 4hr range limit at 1.1311 and the small daily demand area at 1.1260-1.1318. If this does occur, you may want to take into account that a small fresh 4hr decision-point demand area lurks below at 1.1222-1.1253 before hitting the sell button.

For us, shorts will only be considered once, or indeed if price breaks below and retests 1.1200, we would then be looking to target the weekly Quasimodo support level at 1.1109. Again though, this would not be considered a high-probability trade since we would effectively be selling down towards higher timeframe support!

As a final point, our team has not ruled out price rallying from the lower limits of the current 4hr range (see above). Assuming that this does indeed take place, and price reaches the upper limits (1.1490) of the range, we would then be looking for confirmed sells around the 1.1483 mark. Traders should EXPECT price to fake above this level into a 4hr decision-point supply area coming in at 1.1564-1.1509 (located around the aforementioned daily decision-point supply area), hence the need to wait for lower-timeframe confirmation here.

Current buy/sell levels:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).

• Sell orders: 1.1483 (Predicative stop-loss orders seen at: dependent on where one confirms this level).
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