Our thoughts on the EUR right now...
Weekly gain/loss: + 173 pips
Weekly closing price: 1.0897
Following a win by centrist Emmanuel Macron at the French presidential elections last week, the pair gapped 200 pips north, which, as you can see, has yet to be filled. Consequent to this, both weekly resistance at 1.0819 and the 2016 yearly opening level at 1.0873 are now acting supports. Also of note are the two nearby 127.2% Fib extensions (red zone) at 1.1016/1.0954 taken from the lows 1.0340/1.0493 that could potentially halt further buying this week.
Turning our attention to the daily candles, the EUR finds itself consolidating between a 61.8% Fib resistance (green line) at 1.0932 (taken from the high 1.1299)/trendline resistance extended from the high 1.0828 and support penciled in at 1.0850. Directly above here, there’s resistance pegged at 1.0971 and another trendline resistance seen stretched from the high 1.1616. Beneath the current support, however, the next support level on tap can be seen at 1.0776.
A closer look at price action on the H4 chart shows that the unit has recently entered into the phase of a consolidation between 1.0861/1.0950. Momentum, nevertheless, has been firmly positioned to the upside since early April so a lot of traders will likely have their eye on buying the breakout of this range. Though, with daily resistance seen lurking just above at 1.0971 coupled with the weekly 127.2% Fib extension at 1.0954, this could very well end in tears!
Our suggestions: Based on the above notes, we see two possible scenarios:
1. Watch for price to breakout above 1.0950, and assess how H4 candle action behaves. In the event that a solid rejection candle is seen, preferably a full-bodied bearish candle, then not only is a move back into the H4 consolidation possible, but a trade short on the back of this is too.
2. Assuming that the bears do take over this week, longs could be an option from 1.0776/1.0801. Why here? This green area is comprised of a daily support at 1.0776, a round number at 1.08 and February’s opening level at 1.0801. Ultimately, before considering a trade from this region we’d like to see some form of bullish rotation emerge from here (a reasonably sized full-bodied bullish candle would be ideal).
Data points to consider: Treasury Sec Mnuchin speaks at 12.45pm. US Core PCE index release at 1.30 and US ISM manufacturing PMI figures at 3pm GMT+1.
Levels to watch/live orders:
• Buys: 1.0776/1.08 (waiting for a reasonably sized H4 bull candle to form before pulling the trigger is advised, stop loss: ideally beyond the candle’s tail).
• Sells: Trading any fakeout seen beyond 1.0950 is a possibility should a full-bodied rejection candle be seen. Stops would ideally be placed beyond daily resistance at 1.0971.
Weekly closing price: 1.0897
Following a win by centrist Emmanuel Macron at the French presidential elections last week, the pair gapped 200 pips north, which, as you can see, has yet to be filled. Consequent to this, both weekly resistance at 1.0819 and the 2016 yearly opening level at 1.0873 are now acting supports. Also of note are the two nearby 127.2% Fib extensions (red zone) at 1.1016/1.0954 taken from the lows 1.0340/1.0493 that could potentially halt further buying this week.
Turning our attention to the daily candles, the EUR finds itself consolidating between a 61.8% Fib resistance (green line) at 1.0932 (taken from the high 1.1299)/trendline resistance extended from the high 1.0828 and support penciled in at 1.0850. Directly above here, there’s resistance pegged at 1.0971 and another trendline resistance seen stretched from the high 1.1616. Beneath the current support, however, the next support level on tap can be seen at 1.0776.
A closer look at price action on the H4 chart shows that the unit has recently entered into the phase of a consolidation between 1.0861/1.0950. Momentum, nevertheless, has been firmly positioned to the upside since early April so a lot of traders will likely have their eye on buying the breakout of this range. Though, with daily resistance seen lurking just above at 1.0971 coupled with the weekly 127.2% Fib extension at 1.0954, this could very well end in tears!
Our suggestions: Based on the above notes, we see two possible scenarios:
1. Watch for price to breakout above 1.0950, and assess how H4 candle action behaves. In the event that a solid rejection candle is seen, preferably a full-bodied bearish candle, then not only is a move back into the H4 consolidation possible, but a trade short on the back of this is too.
2. Assuming that the bears do take over this week, longs could be an option from 1.0776/1.0801. Why here? This green area is comprised of a daily support at 1.0776, a round number at 1.08 and February’s opening level at 1.0801. Ultimately, before considering a trade from this region we’d like to see some form of bullish rotation emerge from here (a reasonably sized full-bodied bullish candle would be ideal).
Data points to consider: Treasury Sec Mnuchin speaks at 12.45pm. US Core PCE index release at 1.30 and US ISM manufacturing PMI figures at 3pm GMT+1.
Levels to watch/live orders:
• Buys: 1.0776/1.08 (waiting for a reasonably sized H4 bull candle to form before pulling the trigger is advised, stop loss: ideally beyond the candle’s tail).
• Sells: Trading any fakeout seen beyond 1.0950 is a possibility should a full-bodied rejection candle be seen. Stops would ideally be placed beyond daily resistance at 1.0971.
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