Weekly closing price: 1.1246
Weekly opening price: 1.1246
Weekly view: As we can all see from the weekly chart this morning, the EUR/USD remains trading from supply seen at 1.1533-1.1278. Due to this area capping upside since May 2015 (see red arrows), we feel that the shared currency will eventually touch base with support penciled in at 1.0796 in the near future.
Daily view: Before price can head lower, however, we can see that daily action is now flirting with the top-side of a demand area logged in at 1.1242-1.1202. This area has proved a relatively significant zone over the past three months, so a reaction from here is possible despite the location of weekly price (see above). The next upside target to keep a tab on from here can be seen at supply drawn from 1.1446-1.1369.
H4 view: Over on the H4 chart the EUR continued to slide lower on Friday, following a rather aggressive retest of the 1.13 handle. This resulted in price closing the day on its lows at 1.1246, just ahead of support at 1.1233. With little change seen going into this morning’s open, what’s likely in store for this market today/this week?
Well, for a bounce we like the look of 1.1219/1.1233, which is composed of two supports, a converging 61.8% Fib support (green circle) and is also bolstered by the above said daily demand. Ultimate targets from this zone, at least for us, would be the 1.13 handle. The reason for not targeting higher than this line simply comes down to the weekly picture. With such a large weekly (see above) looming over this pair, it is very difficult to be long-term unless of course the area is consumed!
For those considering entering long from our H4 buy zone (the green circle) this week, we would strongly advise only doing so with the backing of lower timeframe confirmation. This could be in the form of an engulf of supply followed by a retest, a break/retest or simply a collection of buying tails around support. Stops are usually placed 5-10 pips beyond confirming structures to give the trade room to breathe.