ICmarkets

EUR/USD: Technical outlook and review.

FX:EURUSD   Euro Fx/U.S. Dollar
250 0 3
Weekly Timeframe: Last week was clearly one for the bears as the market aggressively sold into (and slightly broke) a minor weekly demand area coming in at 1.24996-1.26262. Does this mean price is clear to hit the combined weekly demand/Quasimodo support area below at 1.22403-1.24420/1.22866, or is this break simply a fakeout to collect stops? Let’s see what the lower timeframes have to say about this.

Daily Timeframe: The daily chart reveals that the market closed (1.25184) within a daily demand area seen at 1.24642-1.25616. If the market had broken this area last week, then we would have been confident prices may be continuing south, but as we can see this did not happen. Therefore, according to the daily timeframe , buying is still possible at least up until a small daily support flip level coming in at 1.26213.

4hr Timeframe: The 4hr timeframe is where we feel all the above ties in together. Let’s just recap so we all know where we are. Last week shows that price broke a minor weekly demand area (1.24996-1.26262), while on the daily timeframe ; price is still firmly trading within a daily demand zone seen at 1.24642-1.25616. The 4hr timeframe on the other hand shows price spiked through both a very important 4hr demand area at 1.25005-1.25362, and also a round-number level just below it at 1.25. There were very likely a lot of stop-loss orders taken out just below here, and with that it was no surprise buying was seen shortly after.

We firmly believe the Euro             still has a little way to decline yet. Here’s why, the daily demand area (levels above) appears to be weak from the touch seen on the 03/10/14 at 1.24996. However, if you look into how this daily demand area was formed, it will likely surprise you. Use the 4hr timeframe and look back at the price action that created this daily demand zone . Can you see it is made up of higher highs and higher lows, what this effectively means is that most of the demand was already consumed around this area to begin with (check out the demand consumption wicks at 1.25005/1.24861/1.24642). Also, can you see where this demand consumption starts? It conveniently begins around a 4hr resistance flip level at 1.24408 (not seen on the chart), just a few pips below the weekly demand area upper limit at 1.24420.

Nevertheless, before we see lower prices, pro money may require liquidity in the form of buy orders to sell into, so they may buy into the market pushing prices higher, they may as well as they have the liquidity to buy from the stops just taken out. Early on during this week, we see the possibility of active sellers coming into market around the ignored 4hr Quasimodo level (1.25699) at 1.25661, or even just below the 4hr supply area (1.26310-1.26119) at 1.26088 all ultimately targeting the 4hr resistance flip level mentioned above at 1.24408.

Buy/sell levels:

• Buy orders: N/A (Predicative stop-loss orders seen at: N/A).

• Sell orders: 1.25661 (Predicative stop-loss orders seen at: 1.25946) 1.26088 (Predicative stop-loss orders seen at: 1.26354).
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