ICmarkets

EUR/USD: Technical outlook and review.

FX:EURUSD   Euro Fx/U.S. Dollar
91 0 3
Weekly Timeframe: The weekly timeframe shows that after two weeks of consecutive selling, buying interest may be coming into the market, as a weekly indecision candle formed last week around a combined weekly demand/Quasimodo support area seen at 1.22403-1.24420/1.22866. Assuming that further buying is indeed seen here, price could possibly trade all the way back up to 1.27541, a weekly support flip level. On the other hand, follow-through selling would effectively force prices deeper into this weekly demand area, potentially hitting the weekly Quasimodo support level at 1.22866.

Daily Timeframe: At the time of writing, the EUR/USD             is trapped between a small daily supply area at 1.25763-1.24794, and a long-term daily demand area seen at 1.22877-1.23809. It is only once one of these areas is consumed, will we then have more of an idea on future direction. Let’s take a look on the 4hr timeframe to see what we can find.

4hr Timeframe: The 4hr timeframe shows that price just missed the 4hr demand area at 1.22942-1.23491 (located within both the weekly demand area at 1.22403-1.24420, and the daily demand area seen at 1.22877-1.23809) before taking off north. This move was likely fuelled by the negative NFP numbers released on Friday.

With all the above taken into consideration, where can we see prices trading to this week?

Just before the market closed for the week at 1.24520, a close above a 4hr resistance flip level coming in 1.24408 was seen, which for the time being seems to have respected a minor support flip level just above as resistance (marked in green) at 1.24654. In our opinion one of two things can happen here:

1. The selling pressure from 1.24654 could force price to retest the 1.24408 level, which in turn may encourage further buying of the Euro             . As a consequence this will likely push prices further into the aforementioned daily supply area towards 1.25 (tentative sell orders are seen just below at 1.24973).
2. The selling pressure from 1.24654 may be too strong for the buyers to withstand around 1.24408, and as a result a break of this level could be seen. This will very likely clear the path for further selling down to at least 1.24 where active buyers may be lurking at 1.24057.

Both the round-number levels mentioned above are valid trading areas (1.25/1.24). However, placing limit orders blindly at these levels puts you at risk of unnecessary losses. Waiting for lower-timeframe confirmation may be the best path to take in this case.

Buy/sell levels:

• Buy orders: 1.24057 (Predicative stop-loss orders seen at: 1.23749).

• Sell orders: 1.24973 (Predicative stop-loss orders seen at: 1.25171).

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