ICmarkets
Short

Pending sell order set at 1.1256 – relatively nice confluence!

FX:EURUSD   Euro Fx/U.S. Dollar
199 0 12
Weekly gain/loss: + 11 pips
Weekly closing price: 1.1233
Weekly opening price: 1.1227

Weekly view: In spite of the shared currency ranging around 130 pips last week, the market closed relatively unchanged and as a result chalked up a clear-cut indecision candle. With this, we can see that price remains hugging the underside of a major resistance area seen at 1.1533-1.1278. While we’re confident that this zone will eventually force the pair lower, it’s difficult to judge when that will be as in the past we’ve seen price consolidate for long periods before plunging south (see blue circles). The next downside targets to have an eyeball on from this neighborhood can be seen at the 1.0970 region, followed closely by a major support seen at 1.0819.

Daily view: Looking at the daily chart , however, shows us that the major continues to hold ground within a support area seen at 1.1224-1.1072, more specifically, the 1.1135 support line which now represents a nice-looking triple- bottom formation. It goes without saying that buying from here into potential weekly sellers (see above) is never really good practice. Nevertheless, a decisive break above the September 15th high at 1.1284 (red arrow) could spark a round of buying up to the supply base coming in at 1.1446-1.1369.

H4 view: A quick recap of Friday’s sessions on the H4 timeframe shows that the EUR aggressively rebounded from lows of 1.1153 mid-ways through the London session. The pair climbed back above the 1.12 handle and tagged the mid-way resistance line at 1.1250 which capped upside going into the week’s close. Overall, we believe this move was triggered by a weaker dollar.

Direction for the week: By and large, we do feel that this market will decline in value. However, given the conflicting signals seen on the higher timeframes at the moment, it may be a while before we see this come to fruition.

Direction for today: We fail to see price breaching the H4 Quasimodo resistance line at 1.1257. Not only does this level boast a converging H4 trendline resistance (1.1366/1.1327) and H4 mid-way resistance 1.1250 (green circle), but the apex of this Quasimodo formation (1.1279) also spiked the underside of the aforementioned weekly resistance area!

Our suggestions: From our point of view, shorting the above said H4 Quasimodo formation is high probability. Targets for this setup can be seen at the 1.12 handle, the H4 demand at 1.1131-1.1143, finally followed by the H4 support at 1.1075 and the 1.11 region (green zone). As we mentioned in our previous weekly report, 1.1075/1.11 is not only a good take-profit area for any shorts in this market, it’s also a fantastic barrier to look for longs. It sits within the depths of the aforementioned daily support area , as well as converging with a deep H4 88.6% Fib support at 1.1081 and also a H4 AB=CD bull pattern completion point (taken from the high 1.1327). While this H4 buy zone will very likely bounce price, do keep in mind that by entering long from here you’re effectively buying into weekly flow. As a result, waiting for at least a H4 bullish close to form prior to pulling the trigger may be the better path to take.

Levels to watch/live orders:

• Buys: 1.1075/1.11 - H4 bullish close required (Stop loss: beyond the trigger candle).
• Sells: 1.1256 - pending order (Stop loss: 1.1281).
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