Weekly levels to watch this week fall in at: 1.1532-1.1278/1.1745.
Daily view: From the daily scale, it’s clear to see that last week’s sell-off came from the underside of a historically proven swap seen at 1.1432. This was an area we completely missed in our previous report! From here, the next downside target to keep an eye on is a swap at 1.1214, followed closely by another swap at 1.1148.
Daily levels to watch this week fall in at: 1.1432/1.1214/1.1148.
4hr view: Friday’s 4hr action saw price initially retest the 1.1400 handle as support during early trade, which, as you can see, pressured the EUR up to mid-level resistance at 1.1450. Ultimately, we were looking to enter long from 1.1400, but unfortunately found little price action on the lower timeframes to confirm strength.
Upon reaching 1.1450, price tanked over 150 pips, closing the week out just below 1.1300! Now, fundamentally, we have no idea why the EUR dropped so hard from here. However, from a technical standpoint, it was an almost perfect sell zone: A completion point, 1.1450 mid-level resistance and not forgetting where price was positioned at that point on the higher timeframes (see above)!
On account of the points made above, our team ultimately believes the EUR has the potential to decline further this week. Assuming 1.1300 holds as resistance, it’s likely we’ll see bids around the Quasimodo at 1.1257 tagged in sometime today. Although this hurdle could provide a bounce for an intraday long, we believe it will eventually give way as traders will be looking to connect with the daily swap (support) level at 1.1214. This daily number not only trades close to psychological support 1.1200, but is also surrounded by a nice-looking 4hr at 1.1170-1.1210 as well. However, we have no intention in placing pending orders at the above said 4hr areas today/this week, since weekly selling pressure could possibly overwhelm any bids sitting here. Therefore, we’ll opt to wait for lower timeframe confirming price action before considering longs in this market.
Levels to watch/live orders:
• Buys: 1.1257 Tentative – confirmation required (Stop loss: dependent on where one confirms this level) 1.1170-1.1210 Tentative – confirmation required (Stop loss: dependent on where one confirms this area).
• Sells: Flat (Stop loss: N/A).