ICmarkets

Interesting P.A seen on the EUR traders...

FX:EURUSD   Euro Fx/U.S. Dollar
116 0 0
With the USDX seen plunging lower from H4 resistance at 96.50 yesterday, this, as can be seen from the chart, lifted the EUR pair above the 1.11 handle to highs of 1.1125 on the day. Despite this recent recovery, our team still favors further downside. Here’s why:

• Possible H4 three-drive formation is now seen in the works taken from the high 1.1233. In the event that this pattern does complete, there’s also, as we hope is demonstrated on the chart, a potential H4 AB=CD bullish pattern completing just ahead of the key figure 1.10.

• Daily is now seen flirting with the lower edge of a daily resistance area at 1.1224-1.1104.

Our suggestions: In light of the points made above, here’s what we have logged going forward:

• Watch for the EUR to close below the 1.11 mark. A close below here followed by a retest and a lower timeframe sell signal is a valid trigger to short, targeting the H4 mid-way support 1.1050 and the 1.10 handle. What we mean by a lower timeframe sell signal is either a break of demand followed by a retest, a trendline break/retest or simply a collection of well-defined selling wicks around 1.11. This is, for lack of a better word, the icing on the cake if you will!

• Should price reach 1.10, our team will look to switch from short mode and begin hunting for longs. 1.10 coupled with its nearby H4 Quasimodo support level at 1.0978, a supporting 88.6% H4 Fib level at 1.0983 (green zone) and the possible H4 AB=CD bull pattern we discussed above is a beautiful place to look for a bounce north this week. In addition to this, this buy zone sits around the top edge of a daily support area seen at 1.0909-1.0982 (the next downside target on the daily timeframe ). Should price reach the 1.10 figure, our team would, dependent on the time of day, look to take a long position from this zone with our stops planted below the H4 Quasimodo low (1.0960) at 1.0958.
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