EUR/USD: Buyers fail to conquer trendline, outlook constructive

Cycles & Levels: On the weekly, I am awaiting a test of 1.1550 to confirm the establishment of a range. We need to see the test of the projected midpoint of the expected range before calling it. On the daily, the cycle remains down and we really are at a crossroads here (descending trendline, horizontal resistance, 50% fib retrac). Buyers cannot yet claim a milestone has been reached that would allow further upside until a close above the trendline eventuates. On the hourly, I won’t qualify the US election-led swings as valid cycles, hence why I am sticking to the newly formed up-cycle, which makes this the second up-cycle off the key support at 1.13. I am expecting the development of a move up in line with the underlying hourly structure, subject to not finding acceptance sub 1.1357. Therefore, there is still substantial downside leeway where one can find opportunities to engage in buy-side business.

Correlations & Volumes: In terms of volume, we’ve seen a significant pick up as one would expect on such a high-risk political event, yet the interpretation is nonconclusive as the price closed unchanged for the day. The volume will start having much more significance if a break of Wednesday’s low occurs. If further progress is to be made to the upside, the newly formed POC (highest accumulation of volume) comes at 1.1460. A clearance off this level makes 1.15 the next target to aim for. Note, as the German vs US yield spread stands, you should not hold your breath that a continuation to the upside is a clear-cut. If anything, the higher the pair goes, the greater the opportunity to engage for macro sales. In contrast, the recovery in the German vs Italian yield spread is assisting the pair’s outlook, as the Italian headlines fade away.