Daily Timeframe: The shows that the EUR/USD rallied four days out of five last week. Sellers started showing some enthusiasm on Thursday deep within a daily supply area seen at 1.25056-1.24180 (located just below the aforementioned minor weekly swap level). However, the buyers snapped back control on Friday and closed prices deeper within the aforementioned daily supply area. Assuming that a break above here is seen this week, we could effectively see further buying up to a partially consumed daily supply area at 1.26386-1.25459, which incidentally encapsulates a major weekly swap level at 1.25816.
4hr Timeframe: Following on from Friday’s analysis, the Euro did indeed rally once more from the 4hr demand area seen at 1.23610-1.23918, and came within a few pips of hitting the 4hr Quasimodo (green line) at 1.24892.
If selling interest is seen early on today or even tomorrow, this pair would in our opinion be range bound between the 4hr levels mentioned above. We’d rather be a seller within this range simply because the higher-timeframe picture shows price is trading around supply/resistance (see above) at the moment. Selling here with a pending order would be too risky for our liking; waiting for lower-timeframe selling confirmation around 1.28487 would for us be the best path to take since a fakeout above to 1.25 is very possible.
With that being said, in the event a close above 1.25 is seen, this will likely force the market to test a smashing-looking 4hr supply area seen at 1.25671-1.25336, located within daily supply at 1.26386-1.25459. This could be a nice place to look for shorts if/when price reaches here. On the other hand, if the sellers make a dive for the aforementioned 4hr demand area, and break below it, this could potentially force the market back down to the weekly Quasimodo mentioned above, as this is (as we see it) the only barrier of defense the Euro has that could stop a decline such as this from happening. We are very much looking forward to seeing how the market behaves over the next few days.
Current buy/sell levels:
• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: 1.28487 (Predicative stop-loss orders seen at: 1.25108).