Weekly closing price: 1.0970
Weekly view: Following two months of choppy price action around the lower boundary of a major seen at 1.1533-1.1278, the common currency fell sharply last week. As a consequence, this forced the candle to shake hands with a coming in at 1.0970 by the week’s end. In that this line stretches back to Dec 2015, we feel there’s a chance that a rotation back to the upside may be seen from this barrier this week. Conversely, however, should a break through this level come into view this would likely place the support hurdle at 1.0819 in the firing range.
Daily view: In conjunction with weekly price, the also reveals that the pair is now seen crossing swords with a formed at 1.0909-1.0982. The important thing to consider here is the fact that this zone houses the above noted weekly at 1.0970, thus likely providing the market with a solid floor of bids to tussle with this week.
H4 view: A quick recap of Friday’s sessions on the H4 chart shows the topped out around the mid-way resistance 1.1050 during the early hours of trading. As price began to selloff into the London segment, we saw a mixed response to US retail sales and consumer sentiment data at 12.30pm, as price steadied itself around the key figure 1.10. However, a few hours later, 1.10 was taken out and shortly after retested as a resistance going into Fed Chair Yellen’s speech at 5.30pm GMT .
Direction for the week: While the bears did exhibit strong intentions last week, we cannot ignore what higher-timeframe structures are telling us. Both the weekly and display strong ‘support’. With that being the case, until these areas are engulfed, we are for the time being at least until price challenges the underside of the daily at 1.1072.
Direction for today: As 1.10 was recently wiped out the H4 at 1.0948 (not clearly shown) is now likely the next level of interest. With this number having been a considerable level in the past, and also seen fusing nicely with a H4 mid-way support 1.0950 and a H4 support extended from the high 1.1186, this level is, in our book, worthy of center stage attention today.
Our suggestions: Quite frankly, the only level we’d consider worthwhile at the moment is the aforementioned H4 . Not only because of the H4 confluence, but also due to where it is located in the bigger picture: within the above said daily . As a result, our team has placed an alert around the 1.0950 region. If triggered, we’ll be watching the lower timeframe action closely for signs of direction. A break above a supply followed by a retest, a break/retest or simply a collection of well-defined buying tails around the 1.0950 neighborhood would, in our opinion, be sufficient enough to condone a long entry from here, targeting 1.10 as an initial take-profit zone. Generally speaking, we search for lower timeframe confirmation between the M15 and H1 timeframes, since most of our higher-timeframe areas begin with the H4. Stops are usually placed 5-10 pips beyond confirming structures.
On the data front, nonetheless, we have EUR CPI data at 9am, followed by the ECB President Mario Draghi speaking at the European Cultural Day in Frankfurt at 5.35pm GMT . Therefore, remain vigilant during those times.
Levels to watch/live orders:
• Buys: 1.0950 region (lower timeframe confirmation required prior to pulling the trigger Stop loss: dependent on where one confirms this area).
• Sells: Flat (Stop loss: N/A).