It was another week of red for Europe’s common currency last week, shedding more than 1.0% versus the US dollar. For those technically aware, this should not surprise. In the recent Weekly Market Insight on the weekly timeframe, I noted the following (italics):
The key technical development on the weekly timeframe last week was the formation of a shooting star. The individual bearish candle configuration, as you can see, also shares chart space with weekly Quasimodo support-turned resistance at $1.0888. This, coupled with the possibility of a long-term sell-on-rally scenario developing, adds weight to a bearish scene unfolding here. In other words, the pullback off the late September lows (2022) at $0.9536, in a market trending south since 2021, might be viewed as a sell-on-rally opportunity. $1.0888, consequently, will be a key watch this week as rupturing this base undermines a bearish showing and unearths fresh weekly resistance as far north as $1.1174.
As evident from the weekly scale, additional underperformance did indeed surface last week. Meanwhile, adding to the bearish vibe, not only did price action on the daily timeframe voyage through trendline support, extended from the low $0.9730, Friday cruised below the 50-day simple moving average at $1.0705, a move bringing to light familiar support at $1.0602. Testing and clearing the aforementioned support this week paves the way for further selling to daily support at $1.0412, a level complemented with the nearby 200-day simple moving average, currently trading at $1.0321.
In terms of trend, the daily chart has chalked up a series of higher highs and higher lows since rebounding from daily support at $0.9573 (and weekly support at $0.9606). Additional trend confirmation is visible through price crossing above its 200-day simple moving average as well as a Golden Cross presenting itself early this year (50-day simple moving average crossing above the 200-day simple moving average). We can also see that the 200-day moving average is starting to level off from its down move: another sign of a potential trend reversal to the upside. Having wrote this, however, daily price closing under the 50-day simple moving average, as well as under trendline support and the Relative Strength Index (RSI) cementing position below its 50.00 centreline (negative momentum) certainly questions buyers’ health. Consequently, if $1.0602 is tested, this will be a KEY watch this week.
Direction:
Looking ahead on the H1 timeframe, Quasimodo support from $1.0667 is an interesting location as breaching this boundary unmasks support at $1.0635 and the $1.06 figure. The latter remains the key downside target for sellers this week, according to the bigger picture. As a result, a H1 close sub $1.0667 or a retest at the underside of $1.07 in early trading may prompt additional selling to eventually reach $1.06.
The key technical development on the weekly timeframe last week was the formation of a shooting star. The individual bearish candle configuration, as you can see, also shares chart space with weekly Quasimodo support-turned resistance at $1.0888. This, coupled with the possibility of a long-term sell-on-rally scenario developing, adds weight to a bearish scene unfolding here. In other words, the pullback off the late September lows (2022) at $0.9536, in a market trending south since 2021, might be viewed as a sell-on-rally opportunity. $1.0888, consequently, will be a key watch this week as rupturing this base undermines a bearish showing and unearths fresh weekly resistance as far north as $1.1174.
As evident from the weekly scale, additional underperformance did indeed surface last week. Meanwhile, adding to the bearish vibe, not only did price action on the daily timeframe voyage through trendline support, extended from the low $0.9730, Friday cruised below the 50-day simple moving average at $1.0705, a move bringing to light familiar support at $1.0602. Testing and clearing the aforementioned support this week paves the way for further selling to daily support at $1.0412, a level complemented with the nearby 200-day simple moving average, currently trading at $1.0321.
In terms of trend, the daily chart has chalked up a series of higher highs and higher lows since rebounding from daily support at $0.9573 (and weekly support at $0.9606). Additional trend confirmation is visible through price crossing above its 200-day simple moving average as well as a Golden Cross presenting itself early this year (50-day simple moving average crossing above the 200-day simple moving average). We can also see that the 200-day moving average is starting to level off from its down move: another sign of a potential trend reversal to the upside. Having wrote this, however, daily price closing under the 50-day simple moving average, as well as under trendline support and the Relative Strength Index (RSI) cementing position below its 50.00 centreline (negative momentum) certainly questions buyers’ health. Consequently, if $1.0602 is tested, this will be a KEY watch this week.
Direction:
Looking ahead on the H1 timeframe, Quasimodo support from $1.0667 is an interesting location as breaching this boundary unmasks support at $1.0635 and the $1.06 figure. The latter remains the key downside target for sellers this week, according to the bigger picture. As a result, a H1 close sub $1.0667 or a retest at the underside of $1.07 in early trading may prompt additional selling to eventually reach $1.06.