ICmarkets

EUR/USD: Technical outlook and review...

FX:EURUSD   Euro Fx/U.S. Dollar
230 0 5
Using a top-down approach this morning, we can see that the single currency remains housed within weekly supply drawn from 1.1533-1.1278. Despite seeing little selling interest here over the past three weeks, this area has managed to hold price action lower since May 2015 on five occasions, so the bulls still likely have their work cut out for them if they want to push higher.

Looking down to the daily chart , a collection of indecision candles have recently printed between demand seen at 1.1385-1. 1332             and a Quasimodo resistance level coming in at 1.1460. A break below the current demand likely opens the trapdoor to a sell-off down towards demand penciled in at 1.1143-1.1187.

Moving across to the H4 chart, supply at 1.1451-1.1425 (sits within the aforementioned weekly supply and just below the daily Quasimodo resistance) and the broken Quasimodo support line at 1.1338 (positioned within the extremes of the above said daily demand) has contained price since the beginning of April.

Given the above points, one could look to trade the edges of the current H4 consolidation today. Nevertheless, we would recommend only doing so with lower timeframe confirmation since fakeouts are common within ranging environments such as this. The more preferred method, however, at least for us, would be to wait for the H4 candles to close below the current H4 range demand, and the 1.1300 line. This would place us in a favorable position to look for shorts on any retest seen to the underside of 1.1300, targeting H4 demand at 1.1168-1.1190 (see black arrows), which sits on top of daily demand mentioned above at 1.1143-1.1187.

Alongside this, let’s also keep in mind that by shorting 1.1300, we’d be trading in-line with weekly flow (see above). Furthermore, the close below 1.1300 would very likely force daily action to close beneath the current daily demand, thus opening the path south towards daily demand discussed above at 1.1143-1.1187.

Levels to watch/live orders:

• Buys: 1.1338 Tentative – confirmation required (Stop loss: dependent on where one confirms this level).
• Sells: 1.1451-1.1425 Tentative – confirmation required (Stop loss: dependent on where one confirms this area). Watch for price to consume 1.1300 and look to trade any retest seen thereafter (lower timeframe confirmation required).

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