ICmarkets

EUR/USD - Technical outlook and review.

FX:EURUSD   Euro Fx/U.S. Dollar
163 0 7
Weekly gain/loss: + 73 pips
Weekly closing price: 1.1222

Weekly view: Despite last week’s gains, price remains hugging the underside of a major resistance area seen at 1.1533-1.1278. Although we’re confident that this zone will eventually push 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 descending lower (see blue circles). The next downside targets to have an eyeball on from here can be seen at the 1.0970 region, followed closely by a major support seen at 1.0819.

Daily view: On the other side of the field, nevertheless, daily price was seen relatively well-bid from Wednesday onwards last week from within the support area seen at 1.1224-1.1072, more specifically, a double-bottom base at 1.1135 (now a triple bottom). In the event that a break above the September 15th high at 1.1284 comes into view this week, there’s little active supply seen until the 1.1446-1.1369 region.

H4 view: A quick recap of Friday’s sessions show the shared currency found a pool of bids around the psychological boundary 1.12, rallying to highs of 1.1240, before sporting a small end-of-day correction going into the close.

Direction for the week: As of this point it’s difficult to judge weekly direction given the conflicting signals we’re getting from the higher-timeframe structures (see above).

Direction for today: In spite of the above points, we do not see prices breaching the H4 mid-way resistance 1.1250 today. This is due to it boasting a H4 Fibonacci cluster formation (61.8%/78.6%) taken from the highs 1.1284/1.1327, and also a H4 trendline resistance extended from the high 1.1366 (green circle).

Our suggestions: Look to begin the week hunting for shorts around the 1.1250 mark. This barrier is very likely to produce a bounce lower today given that we are also coming off of a major weekly resistance area. However, as you’re probably already aware, selling 1.1250 puts you in direct fire with the daily candles, so waiting for at least a H4 bearish close to from prior to pulling the trigger might be the best path to take.

Targets for this trade, should it move in favor, are as follows: the 1.12 handle, the H4 demand base seen at 1.1131-1.1143 and finally the H4 support at 1.1075 and the 1.11 band (green zone). Not only is 1.1075/1.11 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 merging with both the daily trendline support taken from the low 1.0516/ H4 trendline support extended from the low 1.0951 and a deep H4 88.6% Fib support at 1.1081. Although this H4 buy zone will very likely bounce price, do take into account that by entering long from here you’re effectively buying into weekly flow.

In addition to the above guys, do keep in mind that German ifo data is scheduled to be released at 8am along with ECD President Draghi taking the stage at 2pm (GMT). Therefore, technicals could take a backseat during this time.

Levels to watch/live orders:
• Buys: 1.1075/1.11 strong-looking buy zone which could, dependent on the time of day and approach, be sufficient enough to condone an entry without waiting for lower timeframe confirmation (Stop loss: 1.1060).
• Sells: 1.1250 region - H4 bearish close required (Stop loss: beyond the trigger candle).
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