perspective: Following Thursday’s strong close below the daily swap level 1.0716, follow-through selling was seen on Friday. This move saw price touch base with a daily demand area seen at 1.0461-1.0565, which, if you look back to the weekly chart and zoom down to the daily scale, you’ll notice that this area of demand was actually a reaction to the major weekly just mentioned above.
4hr timeframe perspective: From this angle, we can see that price recently drove through the first two layers of a 4hr stacked demand formation, and, as reported may happen in the previous analysis, saw a small reaction from the most extreme area at 1.0550-1.0573 (located within the aforementioned daily demand area). With all of the above taken into consideration, where do we see the Euro moving to this week? Well, let’s start off by talking about the current 4hr demand area. A rally from here could very well be seen today, since let’s not forget that price is also trading around the top-side of daily demand area (see above) at the moment. However, the most we’re expecting out of this move is a drive up to the fresh 4hr supply area at 1.0682-1.0663, or even the 1.0700 handle positioned just above it. The reasons for why is simply because the overall downtrend is still very strong, and as we can see from the weekly chart, price still has a little way to go before hitting weekly demand (see above), hence further selling may yet be in store. As such, waiting for lower timeframe confirmation at this 4hr demand area is strongly advised.
Assuming the above does take place, and a rally higher is seen, our main focus will then be directed towards shorting the fresh 4hr supply area just mentioned above. That being said though, we have no interest in placing a pending sell order here and hoping for the best, lower timeframe confirmation will be needed before we risk capital, since this area could very well see a fakeout above to 1.0700 before selling off.
And finally, what if price sees little follow-through from the current 4hr demand area and closes lower? A close below would, in effect, be our cue to begin watching for price to retest this area as supply, since the path south will then likely be clear down to at least the 4hr demand area at 1.0461-1.0510 (located deep within the aforementioned daily demand area).
Current buy/sell orders:
• Buy orders: 1.0550-1.0573 (Predicative stop-loss orders seen at: 1.0544).
• Sell orders: 1.0682-1.0663 (Predicative stop-loss orders seen at: 1.0710).