ICmarkets

Our thoughts for the EUR this week...

FX:EURUSD   Euro Fx/U.S. Dollar
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The past week saw the single currency rally around 150 pips by the close 1.1144. This surge in buying came about after a near-touch of a weekly support hurdle drawn from 1.0796, which, as you can see, pushed price up to below weekly supply penciled in at 1.1533-1.1278. Both areas are significant and certainly deserve a place in our watch list this week.

Following Thursday’s bullish attack, Friday’s daily candle closed out retesting the top-side of a recently broken resistance (now support) at 1.1122. Despite this, price failed to close higher, indicating potential weakness from the bull-side of this market. From this angle, the next upside target from here falls in at supply coming in at 1.1385-1. 1332             . Beyond this current support, however, 1.0955 would likely be the next limit to reach.

A quick look at Friday’s sessions on the H4 chart shows us that trade is now capped between demand at 1.1121-1.1103 and the 1.1200 figure. Given the points made above, here are our battle lines going into this week’s sessions:

For longs:

• Quite frankly, the only area we’d consider to buy from at this point would be the H4 demand zone mentioned above at 1.1121-1.1103 since it converges with the daily support at 1.1122. Granted, this daily level has so far not responded too well (see above), but considering the fact that weekly action shows room to continue north up to supply at 1.1533-1.1278 gives us confidence that further buying may still be on the horizon.

For shorts:

• Mid-level resistance 1.1250 could be a level to keep an eye on for a bounce this week. We only say a bounce because if price reaches this number, then it’s very likely it will want to cross swords with the underside of the aforementioned weekly supply base.

• The 1.1300 figure as well as the H4 Quasimodo level just above it at 1.1338. These two levels form a nice area in which a reversal is highly likely this week. Not only are both barriers positioned around the daily supply area at 1.1385-1. 1332             , but both are also hovering within the aforementioned weekly supply zone .
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