ICmarkets

EUR/USD: A decline in value from the round number 1.32???

FX:EURUSD   Euro Fx/U.S. Dollar
34 0 1
4hr TF.

The higher-timeframe picture resembles the following:

• Weekly TF: After a solid close below weekly demand at 1.32940-1.34847, buyers and sellers are now seen battling it out within the weekly demand area below at 1.31037-1.32262.

• Daily TF: Price is now trading just within a fantastic-looking daily demand area at 1.31037-1.31755. We are prepared for lower prices deeper into this daily demand area, but ultimately we do expect higher prices to be seen in the end.

A spike below the 4hr demand area at 1.35599-1.31879 has very likely stopped out quite a few traders attempting to go long around this area. These stops would effectively become sell orders, so pro money were very likely buying here around the 1.31515 area (marked with a blue arrow).

We believe price now wants to get to the 4hr fresh demand area below at 1.31037-1.31278 (a pending buy order is set just above at 1.31333), since most of the sellers have been cleared now (around the 4hr demand at 1.35599-1.31879) , it should be relatively easy to hit. However pro money cannot just usually press the buy and sell button like we can, they trade massive amounts of capital and need liquidity for this. So this rally we have just seen back up to the round number 1.32 has likely done two things:

1. Enticed buyers into the market following the momentum , this will especially be true in the lower timeframes.

2. Those two spikes above the round number level were likely formed to stop out both traders attempting to fade the level, and also trap any breakout buyers.

If the above is true, and is indeed happening, pro money will have buy orders to sell into to bring prices down to the 4hr demand area at 1.31037-1.31278 which would bring price deep within higher-timeframe demand areas (Weekly demand: 1.31037-1.32262. Daily demand: 1.31037-1.31755), from both the breakout buyers’ orders and also the stops from traders fading the round number level (which would also become buy orders), and also not forgetting any of the buy orders entered into the market following the momentum .

So, in short, we expect a decline in value to be seen today or tomorrow down to the aforementioned fresh 4hr demand area.

Pending orders/P.A confirmation levels:

• Pending buy orders (Green line) are seen just above 4hr demand (1.31037-1.31278) at 1.31333. We strongly believe a first-time reaction will be seen here due to where price is located on the higher-timeframe picture (Weekly demand: 1.31037-1.32262. Daily demand: 1.31037-1.31755).
• No P.A confirmation buy levels (Red line) are seen in the current market environment.

• No pending sell orders (Green line) are seen in the current market environment.
• P.A confirmation sell levels (Red line) are seen just below the 4hr D/S flip area (1.33360-1.33619) at 1.33322. The reasoning behind setting a P.A confirmation sell level here and not a pending sell order is because we have no logical area for a stop-loss order meaning price could push straight through this area.

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