As as the weekly chart appears, daily price shows the pair approaching a fresh demand base taken from 1.1143-1.1187, where we expect to see some sort of reaction should price reach this low this week. Nevertheless, traders also need to be prepared for the possibility that this market could whipsaw through this zone in order to connect with nearby demand lurking just below it at 1.1057-1.1124.
A quick recap of Friday’s movement on the H4 shows that early on in the session; the EUR retested the 1.1300 handle as resistance before plummeting lower. Well done to any of our readers who managed to board this train before it departed as this was a noted move to watch for in Friday’s report. Seeing as the lows made on the 14/15th April (pink circle) were consumed a few hours before the market closed for the week, our focus is now firmly pointing in the direction of H4 demand at 1.1168-1.1190 for a potential buy trade today/this week. We’ve built a case for entry on the following points:
1. The H4 demand has incredible momentum from the base.
2. It ties in nicely with a deep 88.6% Fibonacci support at 1.1180.
3. Psychological support 1.1200 sits just above, which will likely be faked in order to hit our buy zone.
4. The H4 demand also converges nicely with an formation which terminates relatively deep within the zone at around 1.1171.
5. Over on the USDX, which is inversely correlated to the EUR/USD , there’s a nice-looking pattern forming which also completes within the extremes of a H4 supply (95.23-95.49) at 95.47.
6. And finally, let’s not forget that the daily demand noted above at 1.1143-1.1187 bolsters the current H4 demand area.
Despite the huge amount of confluence here guys, we cannot ignore the fact that weekly action is trading out of supply right now (see above). Therefore, we are not going to be placing pending buy orders at the above said H4 demand. Instead, we’ll be watching how the lower timeframe price action behaves before looking to risk capital on this idea. Should we spot a break/retest of lower timeframe supply, or a lower timeframe break/retest or even simply a collection of buying tails around lower timeframe support, we’ll be confident in taking a long position in this market.
Levels to watch/live orders:
• Buys: 1.1168-1.1190 Tentative – confirmation required (Stop loss: dependent on where one confirms this area).
• Sells: Flat (Stop loss: N/A).