Weekly closing price: 1.1445
Weekly opening price: 1.1457
As can be seen from the weekly chart the EUR bulls were on fire last week, managing to reach highs of 1.1459. This saw the pair push deeper into a major area of supply coming in at 1.1533-1.1278. Be that as it may, the bulls will still likely have their work cut out for them if they wish to continue driving this market higher, as this area of supply has held price lower since May 2015! Nevertheless, we should be prepared for all outcomes! So the next target above this zone falls in at a broken Quasimodo resistance line drawn from 1.1745, whilst to the downside, the next target can be seen around support at 1.0796.
Moving down to the daily action, we can see that this recent surge in buying cleanly took out supply at 1.1385-1.1332 (now acting demand), and came within a pip of hitting a Quasimodo resistance line at 1.1460. Taking into account that this daily line sits firmly within the above said weekly supply, this is certainly a number to keep a close watch on today/this week.
A quick recap of Friday’s trade on the H4 shows supply at 1.1400-1.1383 was taken out, and as we just mentioned, came within a pip of connecting with the daily Quasimodo resistance line at 1.1460. However, this morning’s open (1.1457) saw the single currency gap 12 pips north, resulting in price hitting the above said daily Quasimodo barrier!
In light of these points, today’s spotlight will firmly be focused on shorting from the 1.1460 line. Considering how violent price reacted from this level back on the 12th April, we’re confident some sort of bounce lower will be seen. Nevertheless, as one can never tell how deep price will whipsaw through fixed levels such as this one, we will not be selling this market until we’ve pinned down a suitable lower-timeframe sell entry. This could be an engulf of demand and subsequent retest as supply, a break/retest of a or simply a collection of selling wicks around a lower-timeframe resistance. In the event that the above analysis is correct, the first take-profit target will be the H4 demand coming in at 1.1400-1.1383 as this sits on top of daily demand at 1.1385-1.1332 – the next downside target on this timeframe.
Levels to watch/live orders:
• Buys: Flat (Stop loss: N/A).
• Sells: 1.1460 region Tentative – confirmation required (Stop loss: dependent on where one confirms this area).