ICmarkets

EUR/USD: Technical outlook and review.

FX:EURUSD   Euro Fx/U.S. Dollar
323 0 2
Weekly Timeframe: The Euro             continued to lose value against the U.S Dollar last week, with weekly candle seen closing (1.26798) a few pips off its lows deep within a weekly (demand) ‘buy zone’ at 1.26591-1.28010. Assuming buying interest comes into the market here, the buyers will likely have to cross swords with active sellers from around a near-term weekly decision-point area seen at 1.29941-1.28583 before any higher prices can be seen. Alternatively, a close below would suggest to us that continuation selling may be seen down to around a combined weekly demand/Quasimodo support area at 1.22403-1.24420/1.22866.

Daily Timeframe: The daily timeframe shows Friday’s trading action closed just above a long-term daily demand swap area at 1.26229-1.26742. Considering price is trading deep within a weekly ‘buy zone’ (levels above) at the moment, it is very likely we may see some sort of bullish reaction here. With that being said, this pair looks like it has just nose-dived off of a cliff             (more noticeable on the weekly timeframe ), so we have to prepare ourselves for the possibility that this area will be consumed, and lower prices seen down to the next level of significance coming in at 1.25618, a daily decision-point level.

4hr Timeframe: At the time of writing, price is located within an ‘extreme’ 4hr demand area at 1.26591-1.26840. This area is extreme in our opinion because it remains to be the overall origin of a humongous rally that begun on the 13/11/12, making it an area traders were, and still are no doubt paying attention to! It is very likely a lot of buy orders have already been filled around the 1.26883 level, with the possibility that prices will rally up to at least the 4hr fresh supply area at 1.27597-1.27390. With that being said, a long trade here was a little risky in our view, since the 1.27 level (potential resistance) is looming over the 4hr demand area mentioned above like a big black cloud!

Assuming sellers are located around the 1.27 level; short orders are likely going to be filled around the 1.26962 area, since traders on this timeframe will be looking to play the retest of the 1.27 level in hope of this monster down trend continuing. On the assumption this happens, the selling pressure will very likely push prices below the aforementioned 4hr demand area filling potential buy orders around the 1.26554 level, just above a 4hr decision-point area seen at 1.26250-1.26504.

Buy/sell levels:

• Buy orders: 1.26554 (Predicative stop-loss orders seen at: 1.26200).

• Sell orders: 1.27350 (Predicative stop-loss orders seen at: 1.27646) 1.26962 (Predicative stop-loss orders seen at: 1.27070).


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