Bulls echo strong tone above 1.10

27 мая 2020 г.

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

March, evident from the monthly chart, left behind a long-legged doji indecision candle, with its extremes crossing paths with heavyweight supply at 1.1857/1.1352 (intersects with a long-term trendline resistance [1.6038]) and demand at 1.0488/1.0912.

April spent the best part of the month feasting on the top edge of 1.0488/1.0912, squeezing out a Japanese hammer candlestick pattern, typically viewed as a bullish reversal signal. May, as you can see, is recovering off worst levels, on track to form another Japanese hammer candlestick pattern out of current demand.

With reference to the primary trend, price has exhibited clear lower peaks and troughs since 2008.

Daily timeframe:

Partially altered from previous analysis -

The key observation on the daily timeframe this morning shows price engaging the underside of the 200-day simple moving average at 1.1010. Although commonly used to determine trend direction, moving averages often provide support and resistance.

While the pair may pause for breath at 1.1010, journeying through here positions supply at 1.1239/1.1179 in the firing range, stationed just under another area of supply at 1.1323/1.1268 which unites with a trendline resistance (1.0879). A rejection from 1.1010, on the other hand, may position trendline support (1.0635) in sight.

H4 timeframe:

Wednesday observed EUR/USD close in on supply from 1.1057/1.1013, an area that’s capped upside since late March. Adding weight to the zone as a possible resistance point, the 200-day simple moving average on the daily timeframe sits just under the aforesaid supply.

If the mood changes and we dethrone current supply, traders will likely note the possibility of 1.1189/1.1158 making a show, a rally-base-drop supply zone.

H1 timeframe:

Following a vigorous dip to lows at 1.0934, buyers regained consciousness ahead of the 100-period simple moving average and demand at 1.0914/1.0930, and whipsawed through 1.10 into H1 supply at 1.1033/1.1016. As you can see, traders faded upside momentum above 1.10, shorting buy-stop liquidity that delivered moves back beneath 1.10.

A H1 close back above the round number could see moves through current H1 supply to 1.1050, based on the premise the supply area is potentially weakened from the latest reaction.

Structures of Interest:

As stated in recent analysis, monthly price displays scope to push out of demand at 1.0488/1.0912, potentially giving legs to conquer the 200-day simple moving average on the daily timeframe.

Although we’re holding off H4 supply at 1.1057/1.1013, H1 price crossing back above 1.10 places a question mark on its strength, as H1 supply at 1.1033/1.1016 also echoes a weak tone.

As it stands, technical action suggests bulls may take EUR/USD higher today, navigating through 1.10 and H1 supply at 1.1033/1.1016. As such, bullish themes above 1.10 could be in store.