Weekly closing price: 1.1607
After aggressively crunching its way through the weekly at 1.1714 (now acting resistance), the euro failed to maintain this momentum last week. In its place, weekly price chalked up a selling wick ( ), suggesting that a possible move down to the weekly support at 1.1416 may be on the cards this week: a level that boasts an exceedingly robust history.
Turning our attention to the daily candles, we can see that price spent last week basing just ahead of a strong-looking demand area at 1.1479-1.1552, which happens to unite with a channel support etched from the low 1.1717 and is sited just above the aforementioned weekly support. The other key thing to note here is Friday’s strong candle. This, along with the noted weekly selling wick, will likely have caught the attention of sellers and potentially encourage further downside going into the new week.
A quick recap of Friday’s trade on the H4 timeframe shows that the US economy produced fewer jobs than estimated (261K vs. 312K). The euro moved higher in the immediate aftermath of the release to a high of 1.1690, despite the US unemployment rate bettering consensus. momentum quickly diminished from here, however, and was shortly after helped by an upbeat US ISM non-manufacturing PMI, which eventually brought the unit down to the 1.16 handle into the closing bell.
Suggestions: While H4 price begun mildly paring losses from 1.16 on Friday, further buying from here is unlikely due to where price is located on the bigger picture. Does that mean a sell on the break of 1.16 is what we should be eyeing? Not necessarily. Beneath 1.16 sits a H4 demand coming in at 1.1541-1.1570 that is positioned around the top edge of the noted daily demand.
Our idea going into today’s segment is to watch for price to tackle the aforesaid H4 demand base. This area is, in our humble view, good enough for an intraday move back up to at least 1.16. However, should you take this trade, do remain aware that the risk/reward from here is around 1R (that is assuming you place stops below the current H4 demand).
Data points to consider: Eurogroup meetings all day; FOMC member Dudley speaks at 5.10pm GMT .
Levels to watch/live orders:
• Buys: around demand at 1.1541-1.1570 (stop loss: 1.1540).
• Sells: Flat (stop loss: N/A).