ICmarkets

Our thoughts on the EUR....

FX:EURUSD   Euro Fx/U.S. Dollar
134 0 4
Starting from the top this morning, we can see that the EUR has been in a slump for the past four weeks since whipsawing through a major area of weekly supply at 1.1533-1.1278. Given that this weekly area has managed to cap upside in this market since May 2015, we feel further selling is possible down to weekly support drawn from 1.0796. Moving down a level, the daily chart shows a strong-looking selling wick took shape yesterday, following the bounce from daily demand at 1.1057-1.1108. This, as far as we see it, suggests that the buyers may be lacking here.

Stepping across to the H4 chart, yesterday’s action saw the EUR whipsaw through H4 resistance at 1.1143 amid the London/U.S. overlap, remaining below this line for the remainder of the day and closing with little change. Directly beneath current price, a H4 demand at 1.1057-1.1096 (sits within the extremes of the aforementioned daily demand) is seen, which is bolstered by the 1.11 handle. Above the current H4 resistance, the next objective to reach would likely be the 1.12 hurdle.

Our suggestions: In view of the above information, here are some areas you may want to consider today:

• With the USD/SEK             trading from H4 support at 8.3108 (a market which is inversely correlated to the EUR/USD             ), and the EUR trading from H4 resistance at 1.1143, shorts could be possible down to H4 demand at 1.1057-1.1096.
• In the event that the bulls break above the present H4 resistance level, the path, at least on the H4 chart, appears clear up to the 1.12 mark. Taking a long trade on the break/retest of this H4 resistance would place one in-line with daily flow from demand at 1.1057-1.1108, but of course, against the current weekly selling (see above)!
• If price manages to connect with the current H4 demand today, longs are certainly something to keep in mind due to it sitting within the current daily demand base. However, take note that a buy from here puts you in direct conflict with weekly sellers.

For us personally, we are not impressed by the above, and as such will not be risking capital in this market today. Sometimes the best position of them all is to remain flat!
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