1.0650 is firmly on our radar for longs this morning...

7. Feb. 2017

The EUR continued to sag against its US counterpart yesterday, as the US dollar advanced against the majority of its trading peers. H4 demand at 1.0684-1.0709 along with the 1.07 psychological handle housed within, were both wiped out, allowing price to clock a low of 1.0656 and retest the aforementioned H4 broken demand as a resistance area.

From a technical perspective, the weekly timeframe is trading with a reasonably strong downside bias at the moment. With the weekly resistance at 1.0819 holding firm, the next support target on tap falls in at around a weekly support area drawn from 1.0333-1.0502. While this may be true, we also have to take into consideration the fact that the daily candles are now seen checking in with a daily demand base at 1.0589-1.0662.

Our suggestions: Although weekly price indicates further selling may be on the cards, we really like the look of the H4 mid-way support at 1.0650. This level boasts a H4 AB=CD 161.8% ext. at 1.0637, a deep 88.6% retracement at 1.0644, a H4 trendline support etched from the low 1.0589 (yellow zone) and is seen positioned within the above noted daily demand area. One could also say that there’s a possible H4 three-drive approach in play as well. Ideally, we’ll be looking to enter just above 161.8% ext. today, with stops placed 2-3 pips below the H4 Quasimodo support at 1.0621. That way, should a fakeout be seen beyond the 161.8% ext. there’s another H4 trendline seen just below (1.0579) to support our trade. Just to be clear here, we are not looking for a reversal off this area. A bounce is all that’s expected due to what’s been noted on the weekly timeframe.

Data points to consider: There are no scheduled high-impacting news events on the docket today relating to these two markets.