Daily Timeframe: The first trading day of the year saw price close below 1.2041, which in our opinion is significant in itself. Taking out this low will likely inspire the sellers to continue pushing the market south this week down towards a fresh daily demand area seen at 1.1875-1.1971 (located deep within the aforementioned weekly demand area). This would be a very interesting place to look for buying opportunities.
4hr Timeframe: The 4hr timeframe reveals that price was seen teasing the 1.2000 handle into last week’s close. The reason we use the word ‘teasing’ here rather than ‘closed below’ (which is what happened), is simply because this is such a huge psychological number, and a relatively small close of two pips is not significant enough for us to condone selling the Euro at this point.
From a technical perspective, this week will likely begin with the Euro staging a short-covering ascent from 1.2000 up to a 4hr decision-point supply area seen at 1.2068-1.2045, which we’ll attempt to take advantage of if lower-timeframe buying confirmation is seen.
On the other hand, in the event that price continues to trade below 1.2000, our team will be cautious selling here since we would then be effectively trading into higher-timeframe buying opposition from not only weekly demand, but also daily demand as well (see above).
Current buy/sell levels:
• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).