Weekly closing price: 1.1417
Over the last week, the EUR/USD bulls went on the offensive and aggressively closed within the walls of a major weekly drawn from 1.1533-1.1278. Considering that this area has been in motion since May 2015, and held price lower on several occasions since then, we feel the bears will not give up without a fight here!
Branching down to the daily candles, we can see that Friday’s session turned red, consequently breaking a three-day phase. With that being said though, the pair was unable to close below support at 1.1415. Should the bulls reignite momentum from here, the next area of interest can be seen at 1.1464: a major Quasimodo .
A quick recap of Friday’s movement on the H4 timeframe reveals that the 1.14 handle, once again, provided support to this market. This number is closely supported by a demand coming in at 1.1372-1.1390, which we consider to be the original ‘decision point’ that enabled price to initially break above 1.14. Also in view is the mid-level resistance at 1.1450. 34 pips above this number sits a strong-looking supply area (see back to the 4th May 2016) at 1.1529-1.1484 (seen higher on the chart), which along with the daily Quasimodo mentioned above at 1.1464, is the last remaining areas of higher-timeframe structures within the aforementioned weekly supply.
Our suggestions: While the bulls did have an incredibly strong week, we cannot ignore the fact that price remains trading within a major weekly supply. Additionally, it’s also closely positioned to a major daily Quasimodo resistance as well as the H4 showing a strong-looking supply located nearby (see above for values).
Therefore, our team will be watching for price to strike the 1.1484/1.1464 region today/this week (underside of H4 supply/daily Quasimodo resistance) for a possible short trade. It might also be worth noting that stops set above 1.1450 (buy stops), alongside breakout buyers’ orders, will likely provide liquidity for bigger players to sell! Just to be on the safe side though, we are recommending that a trade should only be qualified as viable should the H4 candles print a reasonably sized candle, preferably in the shape of a full-bodied candle.
Data points to consider: US ISM manufacturing PMI at 3pm GMT+1.
Levels to watch/live orders:
• Buys: Flat (stop loss: N/A).
• Sells: 1.1484/1.1464 (waiting for a reasonably sized H4 bear candle – preferably a full-bodied candle – to form before pulling the trigger is advised, stop loss: ideally beyond the candle’s wick).