Daily view: it’s clear to see from this angle that the sell-off in the EUR/USD market began as early as Tuesday following a small fakeout above a daily supply area at 1.1678-1.1606. The week ended with price hitting and slightly rebounding from 1.1148 – a daily swap (support) level.
4hr view: From the 4hr chart, we can see that the ignored daily Quasimodo level at 1.1233 attempted to hold going into the European session on Friday, extending prices as high as the 1.1300 handle. For all that though, the EUR heavily sold off going into the London session, taking out not only 1.1233 but also 1.1200 as well, which, as you can see was retested as resistance going into the weekend.
Consequent to the points made above, we see very little reason why this market will not continue lower down towards 4hr demand at 1.1106-1.1143. This zone, at least in our opinion, is a critical juncture for this pair. If it holds firm, then we may see the EUR rally as it located directly beneath the aforementioned daily swap (support) level. In addition to this, there is also a ’mini’ 4hr close to completing around this current 4hr demand, which could add weight to a possible bounce from here (green arrows). On the flip side, should this area give way, which is possible due to the location of price on the , the EUR may head lower towards daily demand at 1.1015-1.1076.
Therefore, one could look to short from the 1.1200 region today as long as you’re ok with only a possible 1-1 risk/reward trade. Personally though, we’re going to adopt a ‘wait and see’ approach this week, and plan to analyze this market further once/if price reaches the 4hr mentioned above at 1.1106-1.1143, since there is a possibility for both a buy and sell trade from this area.