EUR/USD: Technical outlook

FX:EURUSD   Euro / U.S. Dollar
281 2 4
Weekly Gain/Loss: - 47 pips
Weekly closing price: 1.1398
Weekly opening price: 1.1392

Weekly view: From the top, we can see that the most recently closed weekly candle formed a beautiful-looking bearish selling wick within the confines of a major area of supply coming in at 1.1533-1.1278. Seeing as how this zone has managed to hold the single currency lower since May 2015, we feel lower prices could be seen in the days ahead. The next logical target from here falls in at support drawn from 1.0796.

Daily view: Before we begin looking to short this market, however, traders need to keep in mind that demand is currently being seen on the daily timeframe at 1.1385-1.1332. The response from this zone on Friday was, as you can see, restrained by overhead resistance logged in at 1.1460, forcing price to chalk up a bearish selling wick going into the week’s end. Granted, some traders may take this as a buy signal – an inverted pin bar , yet taking into account both the daily resistance as well as weekly supply mentioned above, this may not be the safest of candle patterns to trade! As far as we can see, the next area of value beyond the current demand is visible around demand carved from 1.1215-1.1264.

H4 view: Analyzing Friday’s sessions over on the H4 chart shows that the bid-side of this market struck highs of 1.1477 on dollar weakness following a lower-than-expected payrolls number. The EUR quickly lost ground, nonetheless, and headed back into demand seen at 1.1400-1.1383. Well done to any of our readers who managed to take advantage of the bounce seen from this demand, as it was a noted move to watch out for in Friday’s report.

Consequent to a relatively stable open this morning, price remains within the confines of the above said demand. Despite this area and its supporting daily demand zone discussed above at 1.1385-1.1332, we feel weekly sellers may take over this market this week! Therefore, instead of looking to buy from current prices, we’re watching for a close below the current H4 demand. Assuming that this comes to fruition, we’d need to see the unit retest the underside of the recently broken demand as supply together with lower timeframe confirmation to consider shorting here. The next downside target as per the H4 chart can be seen at 1.1337 –a small line of demand. This would be our first take-profit target. Beyond this barrier, however, we’re eyeing the small H4 demand chalked up at 1.1256-1.1265, which conveniently sits within daily demand mentioned above at 1.1215-1.1264. The highlighted area (green arc) in between resembles what we believe to be demand consumption, hence our confidence that should price take out 1.1337, the EUR is likely headed lower!

Levels to watch/live orders:

• Buys: Flat (Stop loss: N/A).
• Sells: Watch for price to close below 1.1400-1.1383 and look to trade any retest seen thereafter (lower timeframe confirmation required).
ICmarkets PRO arif_awan
Thank you Arif! Nice work!
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