Our take on the week ahead for the EUR
Weekly view: The EUR/USD edged higher last week, gaining close to 200 pips into the close 1.1336. Admittedly, we were expecting more selling due to price not only positioned just below supply at 1.1532-1.1278, but also because of the recent bearish selling wicks. Instead of this renewed buying interest was seen, bringing this market back into the jaws of the aforementioned supply. Could this lack of selling interest here be a sign that things are becoming more positive for the EUR currency? Let’s see what the lower timeframes have to say on the matter…
Daily view: Daily action shows that this market did not really see much activity until Thursday/Friday. Price broke above two key swap resistance levels seen at 1.1214/1.1313. Friday’s close, however, was very significant to our team, since assuming that the buyers manage to maintain their position above 1.1313 this week, we see very little resistance overhead until supply at 1.1712-1.1614.
4hr view: Coming down into the pits of the 4hr timeframe, we can see that price hesitated around psychological resistance 1.1300 for the best part of the London morning session on Friday. It was only once the U.S traders joined in the party did we see the EUR surge higher, taking out 1.1300 and connecting with a 4hr supply area at 1.1363-1.1332. Trade concluded the week with a slight bearish reaction from this zone.
With the above in mind, do we believe the current 4hr supply zone is worth shorting from today? In all honesty, we would not feel comfortable selling from here. The reasons for why is that we’re quite concerned about the 4hr wick seen on the 01/09/15 at 1.1331. Although this wick did not actually touch this area (missed by a pip or two) it was enough to weaken offers in our opinion. Secondly, there is a far more attractive sell zone sitting just above this area comprising of psychological resistance at 1.1400, 50% Fibonacci resistance at 1.1398 and a potential AB=CD completion point at 1.1397.
Therefore, to sum up, we’re going to be eyeing 1.1400 for a bounce south today/tomorrow. The reason we’re only expecting a bounce from here simply comes down to what we’ve been seeing on the higher timeframe structures (see above). Once, or indeed if, price breaks above 1.1400, this will be our cue to begin looking for longs into this market on the retest since there is ample room above this figure.
Levels to watch/live orders:
• Buys: Watch for offers to be consumed around 1.1400 and then look to enter on any retest seen at this number (confirmation required).
• Sells: 1.1400 Tentative – confirmation required (Stop loss: dependent on where one confirms this level).
Daily view: Daily action shows that this market did not really see much activity until Thursday/Friday. Price broke above two key swap resistance levels seen at 1.1214/1.1313. Friday’s close, however, was very significant to our team, since assuming that the buyers manage to maintain their position above 1.1313 this week, we see very little resistance overhead until supply at 1.1712-1.1614.
4hr view: Coming down into the pits of the 4hr timeframe, we can see that price hesitated around psychological resistance 1.1300 for the best part of the London morning session on Friday. It was only once the U.S traders joined in the party did we see the EUR surge higher, taking out 1.1300 and connecting with a 4hr supply area at 1.1363-1.1332. Trade concluded the week with a slight bearish reaction from this zone.
With the above in mind, do we believe the current 4hr supply zone is worth shorting from today? In all honesty, we would not feel comfortable selling from here. The reasons for why is that we’re quite concerned about the 4hr wick seen on the 01/09/15 at 1.1331. Although this wick did not actually touch this area (missed by a pip or two) it was enough to weaken offers in our opinion. Secondly, there is a far more attractive sell zone sitting just above this area comprising of psychological resistance at 1.1400, 50% Fibonacci resistance at 1.1398 and a potential AB=CD completion point at 1.1397.
Therefore, to sum up, we’re going to be eyeing 1.1400 for a bounce south today/tomorrow. The reason we’re only expecting a bounce from here simply comes down to what we’ve been seeing on the higher timeframe structures (see above). Once, or indeed if, price breaks above 1.1400, this will be our cue to begin looking for longs into this market on the retest since there is ample room above this figure.
Levels to watch/live orders:
• Buys: Watch for offers to be consumed around 1.1400 and then look to enter on any retest seen at this number (confirmation required).
• Sells: 1.1400 Tentative – confirmation required (Stop loss: dependent on where one confirms this level).
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