ICmarkets
Short

Our thoughts on the EUR this week...

FX:EURUSD   Euro Fx/U.S. Dollar
286 0 5
Weekly gain/loss: + 252 pips
Weekly closing price: 1.1361
Weekly opening price: 1.1350

Weekly view: After four weeks of continuous selling, the EUR staged a relatively impressive comeback last week. This, as you can see from the weekly chart, not only placed the pair back within the jaws of a major area of supply seen at 1.1533-1.1278, but it also clawed back over half of the recent losses. Although the bulls have made an appearance here they still have a lot of work to do, as let’s not forget that the current supply area has managed to hold price lower since May 2015!

Daily view: Thanks to last week’s bullish assault, the buyers and sellers are now seen battling for position around the underside of a supply zone coming in at 1.1446-1.1369. Should price break above this zone this week, immediate resistance is seen just ahead at 1.1460. On the flip side, a sell-off from here could potentially bring this market back down to demand drawn from 1.1215-1.1264.

H4 view: 39k jobs were added to the U.S. economy in the month of May versus an expected 159k in Friday’s NFP report, which sent the EUR screaming north into the close. Consequent to this recent surge in buying and a relatively stable open this morning (gap of elven pips), price is now going toe-to-toe with resistance logged in at 1.1367. This area also brings together a 50% Fib resistance at 1.1358 and a trendline support-turned resistance taken from the low 1.1057.

Our suggestions: Given that weekly and daily price are both trading at supply right now (see above), our team is predominantly looking at shorting for the time being. The current H4 resistance at 1.1367, and also the H4 resistance seen above at 1. 1433             (bolstered by the H4 61.8% Fib level at 1.1419) are, in our opinion, beautiful areas to be looking for sell opportunities this week.

We would, however, only recommend trading the above lines if and only if lower timeframe confirming price action is seen. This could be an engulf of demand followed by a retest, a trendline break/retest or simply a collection of selling wicks around a lower timeframe resistance. Should one manage to spot a short opportunity early on today from the 1.1367 region, we’d be looking to take partial profits around the 1.13 band and reducing risk to breakeven.

Levels to watch/live orders:

• Buys: Flat (Stop loss: N/A).
• Sells: 1.1367 region Tentative – confirmation required (Stop loss: dependent on where one confirms this area). 1. 1433             region Tentative – confirmation required (Stop loss: dependent on where one confirms this area).
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