Technical weekly review and outlook for the Euro...

FX:EURUSD   Euro / U.S. Dollar
523 2 4
Weekly Timeframe: Last week saw the market print a whopping full-bodied bearish candle stretching a little over 340 pips from open (1.1180) to close 1.0837). This king-size whopper managed to take out a weekly Quasimodo support level at 1.1109, and drive deep into a weekly demand area coming in at 1.0760-1.0988. A break below this zone would likely see further downside towards another weekly demand area positioned at 1.0499-1.0740.

Daily Timeframe: The daily timeframe shows that Friday was clearly a good day for anyone short the Euro             as the market sold off a cool 187 pips. This move was very likely caused by the NFP employment numbers coming out better than expected at 295K. As a result of this, price closed for the week attacking a daily demand area seen at 1.0760-1.0872 (located deep within the aforementioned weekly demand area), which, as you can probably see, accommodates a long-term daily swap (support) level visible at 1.0825.

4hr Timeframe: The 4hr timeframe shows that Friday’s descent consumed two psychological barriers - 1.1000 and 1.0900, consequently leaving the daily swap level at 1.0825 clearly in the limelight for the time being.

The Euro             is in a clear downtrend, that is obvious, but with price currently trading within higher-timeframe demand (see above) at the moment, we cannot help but feel that the market will try to stabilize itself from Friday’s selling, and might, just might, bounce higher this week. With that said, the long-term daily swap level sitting just below current price at 1.0825 will be our first port of call today. This level’s historical significance goes right back to 1997, which makes it a great area to be looking for confirmed buy trades. In the event that we find a long entry here, our first take-profit target will be set at 1.0895, seen just below 1.0900. The reason we require confirmation at this level is simply because price could, and very likely will, fake lower down to the 1.0800 handle.

However, supposing that price closes below this daily level and retests it as resistance, this will likely suggest further downside is going to be seen on the Euro             , as we believe, and this is only our opinion here, that this remains a key obstacle to a move below the major weekly demand area mentioned above at 1.0760-1.0988.

Current buy/sell orders:

• Buy orders: watching the 1.0825 mark for lower timeframe confirmation (Predicative stop-loss orders seen at: dependent on where one confirms this level).

• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

I still have a high-probability target of 1.0745 on close, based on my understanding of Andrew Cardwell's work with the RSI. If the weekly closes above 1.1382, then I'll have to question the chance of reaching my target. I recall Cardwell saying that he has a target of 1.0400 on close, but I haven't tried to figure out how he arrived at that. So those targets align nicely with your weekly demand areas... It's interesting how we both arrive at the same place with non-correlated methods.

All timeframes are indeed in EXTREME oversold territory, and I agree that some corrective rally is to be expected (hopefully, before the above targets are reached). I plan to use any rally that can produce an overbought reading as an opportunity to jump back in to the short side. Not sure I want to try the long side during a rally...
Hi denovo,

Thanks for your post, very informative!

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