With Europe’s single currency commanding nearly 60.0% of the weight in the US Dollar Index, there is a natural inverse correlation, and any downside pressure in the buck will likely reinforce the euro.
Here is where I stand with the most widely traded currency pair, which finished last week unmoved.
The weekly timeframe has buyers and sellers battling for position above resistance-turned-support at $1.0888. I noted the following in a EUR/USD report last week (italics):
Technically speaking, the currency pair is in the early phase of an uptrend on the weekly after pencilling in a higher high at $1.1076, opening the gate for a run to resistance visible at $1.1174. A similar view is evident on the daily timeframe; the pair has gradually risen since retesting the breached 50-day simple moving average at $1.0765. Resistance warrants attention at $1.1138, and support is thin until back around the SMA, as recent upside movement appears to have consumed any local support.
Price action has been choppy out of the H1 timeframe since early last week. Still, I continue to monitor the $1.10 handle, given the gathering of Fibonacci ratios just above the psychological boundary: three 1.272% Fibonacci projection ratios between $1.1013 and $1.1010 (many Harmonic players may recognise these ratios as ‘alternate’ AB=CD patterns) and a 61.8% Fibonacci retracement at $1.1013. As a result, any whipsaw above the psychological level this week could see active short-term sellers emerge from $1.1013ish as sellers attempt to take advantage of any buy-stops filled above $1.10 (commonly referred to as a ‘stop run’). Should sellers push, the $1.09 handle is a notable downside objective on the H1.
In conclusion, with the bigger picture indicating higher prices to at least daily resistance from $1.1138, a bull trap forming above $1.10 on the H1 timeframe may be short-lived. Overall, therefore, despite the likelihood of a short-term bearish scenario forming above $1.10, a continuation move higher to H1 resistance at $1.1068 is also on the table.
Here is where I stand with the most widely traded currency pair, which finished last week unmoved.
The weekly timeframe has buyers and sellers battling for position above resistance-turned-support at $1.0888. I noted the following in a EUR/USD report last week (italics):
Technically speaking, the currency pair is in the early phase of an uptrend on the weekly after pencilling in a higher high at $1.1076, opening the gate for a run to resistance visible at $1.1174. A similar view is evident on the daily timeframe; the pair has gradually risen since retesting the breached 50-day simple moving average at $1.0765. Resistance warrants attention at $1.1138, and support is thin until back around the SMA, as recent upside movement appears to have consumed any local support.
Price action has been choppy out of the H1 timeframe since early last week. Still, I continue to monitor the $1.10 handle, given the gathering of Fibonacci ratios just above the psychological boundary: three 1.272% Fibonacci projection ratios between $1.1013 and $1.1010 (many Harmonic players may recognise these ratios as ‘alternate’ AB=CD patterns) and a 61.8% Fibonacci retracement at $1.1013. As a result, any whipsaw above the psychological level this week could see active short-term sellers emerge from $1.1013ish as sellers attempt to take advantage of any buy-stops filled above $1.10 (commonly referred to as a ‘stop run’). Should sellers push, the $1.09 handle is a notable downside objective on the H1.
In conclusion, with the bigger picture indicating higher prices to at least daily resistance from $1.1138, a bull trap forming above $1.10 on the H1 timeframe may be short-lived. Overall, therefore, despite the likelihood of a short-term bearish scenario forming above $1.10, a continuation move higher to H1 resistance at $1.1068 is also on the table.