EUR/USD Expanding Wedge offers an immediate downward bias
DXY (USD Index) - there is no clear indication that the correction to the upside has come to an end. The daily chart highlights the next upside barrier as the 38.2% retracement level of 105.05. The intraday chart highlights the completion of a bearish Bat formation at 104.96. It should also be noted that we have a ‘gap open’ from Friday, September 8 at 104.67. Gaps tend to be closed.
Conclusion: although there is scope for intraday losses, the bias is bullish to 104.96-105.05.
EUR/USD - the medium-term chart highlights the 38.2% pullback level being located at 1.0610. This is the minimum requirement for the BC leg in the Gartley formation. This keeps the focus on the downside.
Intraday trading has been mixed and volatile. This has resulted in an Expanding Wedge formation being posted. This pattern has a bias to break to the downside. On a move through the trend of higher lows at 1.0718, and the measured move target is 1.0686. To the upside, we have bespoke resistance located at 1.0774. With a solid supply zone located at 1.0792, we look to this zone (1.0774-1.0792) as the upside barrier. The trend of higher highs is located at 1.0807.
Conclusion: today we have the ECB monetary policy decision followed by the press conference. I am expecting high volatility over this event. The DXY highlights scope for mild dips. Correlation would suggest there is scope for mild rallies in EUR/USD. Selling at the resistance zone with a stop above the trend of higher highs targeting the medium-term support at 1.0610 offers reasonable risk-reward today.
Resistance: 1.0774 (bespoke), 1.0792 (supply), 1.0807 (trend of higher highs)
Support: 1.0718 (wedge breakout), 1.0686 (measured move), 1.0610 (medium-term target)
Point of Control - 1.0843 (September 1)
Conclusion: although there is scope for intraday losses, the bias is bullish to 104.96-105.05.
EUR/USD - the medium-term chart highlights the 38.2% pullback level being located at 1.0610. This is the minimum requirement for the BC leg in the Gartley formation. This keeps the focus on the downside.
Intraday trading has been mixed and volatile. This has resulted in an Expanding Wedge formation being posted. This pattern has a bias to break to the downside. On a move through the trend of higher lows at 1.0718, and the measured move target is 1.0686. To the upside, we have bespoke resistance located at 1.0774. With a solid supply zone located at 1.0792, we look to this zone (1.0774-1.0792) as the upside barrier. The trend of higher highs is located at 1.0807.
Conclusion: today we have the ECB monetary policy decision followed by the press conference. I am expecting high volatility over this event. The DXY highlights scope for mild dips. Correlation would suggest there is scope for mild rallies in EUR/USD. Selling at the resistance zone with a stop above the trend of higher highs targeting the medium-term support at 1.0610 offers reasonable risk-reward today.
Resistance: 1.0774 (bespoke), 1.0792 (supply), 1.0807 (trend of higher highs)
Support: 1.0718 (wedge breakout), 1.0686 (measured move), 1.0610 (medium-term target)
Point of Control - 1.0843 (September 1)