Looking for longs on the EUR

FX:EURUSD   Euro / U.S. Dollar
202 0 6
Weekly gain/loss: - 270 pips
Weekly closing price: 1.0583

Weekly view: The shared currency sustained further losses last week, consequently breaking through the yearly opening level at 1.0873, a support at 1.0819 as well as a trendline support extended from the low 0.8231. The next downside target from this point comes in at 1.0333-1.0502: a support area that stretches as far back as 1997!

Daily view: Thanks to the recent bout of selling, the daily candles are, at present, trading within shouting distance of a Quasimodo support level drawn from 1.0557. While this level is interesting, there’s a far more appealing Quasimodo support seen directly below it at 1.0494, as this hurdle is sited around the top edge of the above said weekly support area .

H4 view: A quick recap of Friday’s action on the H4 chart shows that the candlesticks skimmed the edge of a supply zone seen at 1.0646-1.0689 going into London lunchtime, and went on to settle for the week closing below and retesting the 1.06 hurdle as resistance. The next support on tap falls in at 1.0550, a mid-way level which sits 7 pips below the daily Quasimodo support mentioned above at 1.0557.

Direction for the week: Further selling is probable until the pair crosses swords with the top edge of the weekly support area at 1.0333-1.0502. In light of its historical significance, dollar bulls may look take a breather here.

Direction for today: The upside rejection seen off 1.06 could possibly spark a selloff today down to at least 1.0550, given that bids around Friday’s intraday morning low 1.0581 were likely consumed prior to 1.06 being tested.

Our suggestions: While the path south may very well be clear down to 1.0550 on the H4 chart, selling right now is difficult considering how close by the daily Quasimodo support at 1.0557 is located. What really grabs our interest, as we mentioned above in the daily section, is the Quasimodo support seen directly below it at 1.0494. Not only has this level fused a connection with the top edge of the weekly support area , but it sits six pips below the psychological band 1.05! This confluence is, at least in our book of technical setups, enough to condone a pending buy order at 1.0495 with a stop placed below the head of the daily Quasimodo formation at 1.0459.

Granted, this does mean buying into the current downside flow brought on by the possibility of a rate hike in December. However, we’re not looking for a full-blown reversal here, simply a well-planned bounce back up to the 1.0557 region as an immediate take-profit zone.

Data points to consider: ECB President Mario Draghi speaks at 4pm GMT             .

Levels to watch/live orders:

• Buys: 1.0495 ( stop loss: 1.0459).
• Sells: Flat (stop loss: N/A).
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