ICmarkets

EUR/USD: Technical outlook...

FX:EURUSD   Euro Fx/U.S. Dollar
170 0 6
Weekly gain/loss: - 84 pips
Weekly closing price: 1.1083
Weekly open price: 1.1076

Weekly view: From the weekly chart, we can see that the single currency rotated to the downside last week just ahead of a major weekly resistance area drawn from 1.1533-1.1278. Providing that sellers remain in the driving seat this week, the next downside target can be seen at 1.0819 – a major weekly support level.

Daily view: Following Tuesday’s spike above the daily resistance area penciled in at 1.1224-1.1104, the EUR changed tracks and entered into a three-day sell off, clocking lows of 1.1045 by the week’s end. To the downside, the next areas to keep an eye on from here are the daily support area formed by 1.0909-1.0982, followed closely by the above said weekly support level.

H4 view: A quick recap of Friday’s trade on the H4 shows that price fell sharply after retesting the H4 mid-way resistance line at 1.1150, on the back of better than expected US employment data. The 1.11 handle was taken out, and later retested as resistance after a bounce was seen from the H4 mid-way support level 1.1050.

Direction for the week: In view of the higher-timeframe structure, further downside is likely on the cards, at least until the daily support area mentioned above at 1.0909-1.0982.

Direction for today: Assuming offers hold ground around the 1.11 mark today, there’s likely to be a push down to 1.1050. While price could bounce from this line, we feel the pressure from the above noted higher-timeframe structures will push the EUR pair down to the key figure 1.10. Granted, this may not come into view today though as Monday’s are notoriously slow movers!

1.10 coupled with a nearby H4 Quasimodo support level at 1.0978 and a supporting 88.6% H4 Fib level at 1.0983 is also a nice place (green zone) to look for a bounce north today/this week. The reason being is that it sits around the top edge of the aforementioned daily support area (the next downside target on the daily timeframe ).

Our suggestions: If 1.11 is retested for a second time, a sell (preferably with lower timeframe confirmation) down to 1.1050, followed by 1.10 is something to consider.

Should price reach the 1.10 figure today/this week, our team would, dependent on the H4 approach and time of day, look to take a long position from this area with our stops planted below the H4 Quasimodo low (1.0960) at 1.0958.

Levels to watch/live orders:

• Buys: 1.0978/1.10 Dependent on the time of day and approach to the zone, a market order from here is a possibility (Stop loss: 1.0958).
• Sells: 1.11 region Tentative – confirmation required (Stop loss: dependent on where one confirms this area).

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