Breaking through H1 demand at 1.0971/1.0986 may spark sellers

3 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 demand-turned supply at 1.1857/1.1352 (intersects with a long-term trendline resistance [0.6038]) and demand at 1.0488/1.0912.

April, as you can see, spent the best part of the month feasting on the top edge of 1.0488/1.0912, though did manage to squeeze out a Japanese hammer candlestick pattern, viewed as a bullish reversal candlestick signal.

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

Daily timeframe:

Partially altered from previous analysis -

After a phase of foot-dragging, EUR/USD extended recovery gains off the 78.6% Fib level at 1.0745 into the week’s close.

Friday, as you can see, nudged through the April 15 high at 1.0990, unmasking the 200-day simple moving average (SMA) at 1.1034. Areas of relevance beyond the noted structures can be seen at the March 27 high from 1.1147 and supply at 1.1239/1.1179.

Indicator-based traders will also recognise the RSI indicator crossed above 50.00 into the closing stages of the week, indicating a bullish theme.

H4 timeframe:

Friday unearthed a reasonably well-presented Japanese shooting star candlestick pattern, viewed as a bearish reversal candlestick signal. Interestingly, the pattern formed off the lower boundary of supply at 1.1057/1.1013, joined with a trendline support-turned resistance (1.0635), a 61.8% Fib level at 1.0989 and a Fib ext. level from 1.0987.

Minor demand rests around 1.0950 (black arrow), with notable demand not expected to put in an appearance until 1.0906/1.0878, a supply-turned demand area.

H1 timeframe:

After taking a run at buy stops above the widely watched 1.10 level Friday, intraday flow reverted to a modest defensive play and tested demand at 1.0971/1.0986 at the tail end of the session. This demand, technically speaking, carries some weight, given it was likely the decision point to break above 1.10, meaning unfilled buy orders may be left within this region.

South of the aforesaid base, 1.0950 resides nearby, with a break of this level bringing to light a small supply-turned demand area at 1.0907/1.0900, the 1.09 handle, trendline support (1.0727) and a 100-period simple moving average (SMA).

With respect to the RSI, we also just exited overbought territory, fading peaks of 77.00.

Structures of Interest:

Long term:

The bullish candlestick signal formed out of monthly demand at 1.0488/1.0912 may eventually prompt a wave of buying. A daily close above the 200-day simple moving average (SMA) would serve as relatively strong confirmation we may be heading for higher levels longer term.

Short term:

H4 supply at 1.1057/1.1013, along with surrounding confluence (see above), suggests lower levels in the early stages of the week. Breaking through H1 demand at 1.0971/1.0986 could be enough to spark sellers. Conservative players, however, may want to see 1.0950 taken before considering intraday bearish scenarios.