ICmarkets

EUR/USD: Technical outlook and review...

FX:EURUSD   Euro Fx/U.S. Dollar
408 0 1
Despite the brief surge of (short-covering) buying seen at the beginning of yesterday’s open (1.1280), the EUR heavily sold off for the remainder of the day. Consequent to this, the Quasimodo support at 1.1257, as well as the psychological support 1.1200 was wiped out.

Should 1.1200 hold as resistance going into the more liquid sessions today, we believe the EUR is once again going to head south, potentially connecting up with demand at 1.1131-1.1158.

Supporting a decline from this number, we can see weekly action still loitering within supply at 1.1532-1.1278, and the daily chart showing price has recently closed below a swap support barrier at 1.1214. However, we would only short from 1.1200 should we manage to spot a lower timeframe setup that allowed a small stop, since there’s only forty or so pips on the table down to the aforementioned demand.

In the event the above plays out and price drives lower, we would also be interested in buying (with confirmation) from this demand for the following reasons:

• Supported by a daily swap (support) level at 1.1148.
• Mid-level support seen just within the demand at 1.1150.
AB=CD bullish pattern which completes at 1.1133.
• Deep 88.6% Fibonacci support just below the zone at 1.1127 (watch for a fakeout here).

The only downside to this trade is that there’s little converging weekly support. In fact, by entering long from the above said 4hr demand zone, one would potentially be going up against weekly flow. That being said though, due to the amount of confluence seen, we’re confident a bounce north at the very least will take place from here.

Levels to watch/live orders:
• Buys: 1.1131-1.1158 Tentative – confirmation required (Stop loss: dependent on where one confirms this area).
• Sells: 1.1200 Tentative- confirmation required (Stop loss: dependent on where one confirms this level).


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