EUR/USD: technical outlook and review...

FX:EURUSD   Euro / U.S. Dollar
Following a stronger-than-expected rebound from the weekly range demand two weeks ago at 1.0519-1.0798, the single currency continued to appreciate last week, gaining 110 pips by the close 1.0984. In the event that the buyers continue to push this pair higher this week, we might, just might, see the EUR fill this range up to supply coming in at 1.1532-1.1278.

On the other side, however, daily supply at 1.1072-1.1013 and its converging 50.0% Fibonacci level at 1.1011 is proving a troublesome obstacle to overcome. A sustained break above this zone would suggest that this pair may want to plug into offers around supply drawn from 1.1385-1.1332 (hangs within the above said weekly range supply). Conversely, if the sellers continue to put up a fight here, the swap support level seen at 1.0813 may come into play this week.

A quick look at Friday’s trade on the H4 shows us that price was relatively well-bid from the swap support barrier given at 1.0936, pulling the currency up to the large psychological resistance 1.1000/ supply at 1.1029-1.1010 by the day’s end.

Given these points, the buyers clearly have work to do before they can touch base with the upper boundary of the weekly range (see above). And as such, our team has come to a general consensus that buying the EUR medium-term is out of the question unless either a decent break above daily supply is seen, or price connects with the daily swap (support) barrier (see above for levels).

Regarding today, however, we see this market being sold from 1.1000 back down to retest 1.0936, which would certainly be an intraday short we’d consider trading as long as confirming resistance is seen from the lower timeframes. For traders with their eye on the H4 demand zone at 1.0879-1.0899, nevertheless, caution is advised. Admittedly, this is a tempting area due to it converging with the 61.8% Fibonacci level at 1.0890 and psychological support 1.0900 and, as such, will probably bounce this market. However, do bear in mind that price could very easily ignore this zone and head for either the mid-level support just below at 1.0850 or the daily swap support mentioned above, which is our more preferred area to look for longs this week!

Levels to watch/live orders:

• Buys: 1.0879-1.0899 Tentative – confirmation required (Stop loss: dependent on where one confirms this area). 1.0813 Tentative – confirmation required (Stop loss: dependent on where one confirms this level).
• Sells: 1.1000 Tentative – confirmation required (Stop loss: dependent on where one confirms this level).
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