ICmarkets

Our take on the EUR...

FX:EURUSD   Euro Fx/U.S. Dollar
197 0 10
Weekly gain/loss: + 7 pips
Weekly closing price: 1.0590

Weekly view: Price action took on more of a subdued tone last week, consequently chalking up an indecision candle by the close. Despite this, the shared currency did, however, come within a whisker of connecting with a major support area coming in at 1.0333-1.0502. The next upside objective from this angle falls in at a trendline resistance extended from the low 0.8231, shadowed closely by resistance at 1.0819 and the 2016 yearly opening level at 1.0873.

Daily view: In conjunction with weekly price hovering above a support zone, the daily candles recently formed a beautiful triple bottom support formation around the 1.0520 neighborhood, stretching as far back as Apr 2015. While further buying is a strong possibility from this support, there’s a minor supply barrier shaped by four beautiful selling wicks at 1.0657-1.0626 to contend with first. The other key thing to watch for this week is a fakeout through the triple bottom level to the Quasimodo support at 1.0494, which is conveniently positioned around the top edge of the above noted weekly support area!

H4 view: Underpinned by the mid-way support barrier at 1.0550, the H4 bulls managed to find their feet early on in Friday’s trading. This, as you can see, propelled the EUR up to the 1.06 handle, which held firm into the week’s close, but not before suffering a rather aggressive fakeout going into US trading up to supply at 1.0643-1.0624.

Direction for the week: Despite weekly upside looking relatively clear, the daily’s structure is, as we mentioned above, somewhat challenging. Until we see a daily close above the aforementioned daily supply, as well as a close above the daily resistance at 1.0710, our desk has stamped medium-term direction as ‘restricted’ this week.

Direction for today: In view of the H4 closing the week beneath the 1.06 barrier, and given daily price recently touched base with the underside of the above said minor supply, price may continue to extend lower from here down to 1.0550, followed closely by the Quasimodo support coming in at 1.0526 and maybe even the 1.05 barrier.

Our suggestions: Given that higher-timeframe flow is slightly cramped at the moment (see above), we feel there’s equal opportunity to trade this pair both long and short today:

Longs:

1. On the account that 1.05 molds beautifully with the daily Quasimodo support at 1.0494 and also the top edge of the weekly support area at 1.0502, the 1.05 handle is, at least in our book of technical setups, stable enough to permit a pending buy order at 1.0495 with a stop placed below the head of the current daily Quasimodo formation at 1.0459.

2. The H4 Quasimodo support at 1.0526 is interesting, but is slightly more precarious than option 1, since this level is liable to be faked in order to reach the 1.05 neighborhood given how close it is.

Shorts:

1. 1.06 could be a potential barrier to short today given the last two H4 bearish candles printed prior to the close.

2. The Quasimodo resistance at 1.0649 is even better than 1.06, in our opinion. This is due to the level being housed within the extremes of the above noted daily supply, and also positioned around the lower edge of a H4 resistance area drawn from 1.0646-1.0689.

Data points to consider: ECB President Draghi speaks at 2pm GMT.


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