ICmarkets
Short

EUR/USD: Technical outlook and review

FX:EURUSD   Euro Fx/U.S. Dollar
231 1 2
The past week saw the single currency decline around 115 pips into the close 1.0792, forcing price to close below weekly range support coming in at 1.0851 (blue line). Should the sellers manage to hold ground beneath this barrier this week, there’s little to stop them, at least on this timeframe, from dragging this pair down to the long-term weekly trendline extended from the low 1.0823.

Moving down to the daily timeframe , support at 1.0813 was taken out on Friday, potentially opening the path for further selling this week down to at least support drawn from 1.0725. Beyond this barrier, however, we’re looking at demand fixed between 1.0519-1.0583, which if you look back to the weekly chart, you’ll notice it converges beautifully with the aforementioned trendline support.

Turning our attention now to the H4 chart, we can see that the week ended with a close below psychological support 1.0800. With this in mind, here is what we see right now:

• The green arrow marks price rebounding from 1.0800 during the U.S. open. This move clearly filled bids around this barrier, quickly reaching highs of 1.0837.

• The blue arrows above point to what we believe to be supply consumption. Check out how each wick (1.0837/1.0845/1.0862) stabs north while the market is in decline. This indicates, at least to us, offers are weak above 1.0800.

• The black arrow marks a rather aggressive fakeout below 1.0800 on Thursday.

Therefore, with little offers likely remaining above 1.0800 and the rebound from 1.0800 (green arrow) likely taking out the remaining unfilled bids here from Thursday’s fakeout, we believe the close below 1.0800 is likely legit. That being the case, our team will be looking for a confirmed retest of 1.0800 around the open today. Targets, should the trade come to fruition, fall in at H4 support drawn from 1.0772, followed closely by mid-level support 1.0750 and then finally the daily support mentioned above at 1.0725. We may, due to what we’re currently seeing on the weekly timeframe (assuming our trade reaches final take profit that is), look to leave some of the position in the market this week to try and take advantage of any further selling seen.

Levels to watch/live orders:

• Buys: Flat (Stop loss: N/A).
• Sells: 1.0800 Tentative – confirmation required (Stop loss: dependent on where one confirms this level).
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