Considering only the 4hr timeframe for the moment, we feel, at least from a technical standpoint, that the EUR could potentially bounce from this barrier today. The reasons? Stops = liquidity. The sell stops taken from below the 4hr demand area provide the market buying liquidity, which could be enough to tempt informed traders to buy.
While this may be plausible, we still have to take the bigger picture into account. Up on the weekly chart, we can see that price has recently pinned the underside of weekly supply at 1.1532-1.1278, and as a result is looking very . Meanwhile, down on the , two daily swap (support) levels (1.1214/1.1148) were engulfed, which, as you can see, came within a cat’s whisker of hitting clear daily demand at 1.1015-1.1076.
With the above in mind, buying from the aforementioned 4hr demand area no longer seems as attractive as it first did. Although price is effectively bouncing off of the top-side of daily demand right now, it is also lurking close to daily support-turned resistance at 1.1148 – not to mention the fact that the EUR is holding below weekly supply! This –coupled with the mighty NFP due to take the limelight later on today, we’ll patiently stand aside and await more favorable – less cramped price action.