Daily view: The shows that the rebound seen from the Bat reversal zone (1.1516/1.1376) on Thursday extended lower during Friday’s session, consequently closing the week at 1.1208. As far as we can see, further selling could potentially take place this week, as price may want to retest the daily swap area again seen at 1.1051-1.0918 (located just below the weekly swap level 1.1051). This would be a good place for any traders who took short positions at the reversal zone to maybe lock in some profits and move stops to breakeven, as it lines up beautifully with the of A-D.
4hr view: The 4hr timeframe shows that price reacted sluggishly to NFP data. Intraday resistance at 1.1265 held firm throughout both the London and New York’s session, while the round number 1.1200 took some punishment. An area that did see a nice reaction during the NFP, however, was the small 4hr seen just below 1.1200 at 1.1175-1.1187.
With everything taken into consideration, where do we see the Euro moving to this week? Well, longer term it’s very difficult to tell until either weekly supply or the weekly swap level is engulfed (see above). Today, and possibly into tomorrow, nevertheless, will likely see the bulls and bears go toe-to-toe between 4hr demand 1.1175-1.1187 and 1.1265 resistance. Intraday buying and selling opportunities may exist within this 70-pip range; nonetheless traders should remain vigilant to the fact that fakeouts will very likely occur at the extremes. As such, we would recommend waiting for some sort of lower timeframe confirming signal before risking capital to this idea.
In the case that the 4hr demand area at 1.1175-1.1187 is consumed, the river south should be ‘ripple free’ so to speak down to at least the 1.1100 level. Despite this, for us to be given the ‘green light’ to short following a close lower, we would need to see not only a strong retest of this 4hr demand as supply, but also supporting lower timeframe strength i.e. a , engulf of demand etc…On the subject of 1.1100, this could prove to be a nice area to look for buys should price reach this low, since it’s located in close proximity to the weekly swap level 1.1051 as seen marked with a green buy zone.
On the flip side, if the 1.1265 4hr resistance is violated this week, breakout buyers may want to hold fire since you’ll be buying into potential round number resistance 1.1300, which does not leave much room for price to breathe. Selling from 1.1300 would also not be something we’d take lightly since 1.1265 could potentially be supportive enough to throw us into drawdown.
Levels to watch/live orders:
• Buys: 1.1175-1.1187 (Predicative stop-loss orders seen at: 1.1165).
• Sells: 1.1265 (Predicative stop-loss orders seen at: dependent on where one confirms this level).