ICmarkets

EUR/USD: Technical outlook and review.

FX:EURUSD   Euro/U.S. Dollar
473 0 5
Weekly Timeframe: The recently closed weekly candle shows that the Euro             saw a further decline in value last week, subsequently breaking below a major weekly demand area at 1.1875-1.2095, and forcing the market down towards a weekly Quasimodo support level coming in at 1.1758 (weekly trendline confluence - 23/10/2000 – 0.8230) . Buyers were not completely dormant in this move, a rebound was seen, but at this point in time it’s very difficult to tell if it is indeed genuine buying interest, or simply short-covering.

Daily Timeframe: The daily timeframe shows that a two-bar reversal pattern was printed during Thursday and Friday’s trading sessions around a daily demand area coming in at 1.1776-1.1838 (located just above the aforementioned weekly Quasimodo support level ). From a technical standpoint, we feel there is a good chance higher prices could be seen this week up to 1.2041. It will be interesting to see what the 4hr timeframe has to say about this.

4hr Timeframe: The 4hr timeframe saw price oscillating around the 1.1800 handle before spiking south towards the aforementioned weekly Quasimodo support level for the second time. This promptly saw active buying enter the market pushing prices north, closing the week (1.1840) just below a partially consumed 4hr supply area at 1.1895-1.1856.

In our opinion, buying the Euro             now would be considered a risky trade to take on. Granted, we do have a higher-timeframe weekly support with a nice-looking two-bar reversal pattern seen on the daily timeframe , but buying into 4hr supply would effectively go against our conservative nature, and in addition to this, we mustn't forget that the Euro             has been showing clear weakness over the past 6-7 months.

Therefore, no long trades will be executed until price consumes this area of 4hr supply, and with a bit of luck close above the 1.1900 handle in the process. As a consequence, this will likely see a prompt retest forcing the market northbound toward the humongous 1.2000 level. The close above 1.1900 will be our cue to begin preparing to enter long on any retest offered. The reason we believe prices can rally up to 1.2000 from 1.1900 is simply because to the left we see clear supply consumption wicks marked with green arrows at 1.1895/1.1957, effectively clearing the path north.

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).

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