1.08 on precarious ground, traders...

11 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, squeezing out a Japanese hammer candlestick pattern, typically viewed as a bullish reversal signal.

May, on the other hand, is tunnelling back into the said demand, so far disregarding April’s candlestick pattern.

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

Daily timeframe:

Partially altered from previous analysis -

Bottoming just ahead of the 78.6% Fib level at 1.0745 in the later stages of last week, price clawed back a portion of recent losses. However, Friday, abruptly off best levels, finished the session unmoved, producing a candle wick. This, along with Monday’s 0.2% decline, places a question mark on further buying from here.

Another constructive development is the formation of a bearish pennant pattern between 1.1147/1.0635. It is also worth pointing out the 200-day simple moving average (SMA) circles the upper portion of our pennant configuration around 1.1025.

A convincing daily close under the current pattern structure might give rise to a fresh wave of selling. Breaking lower would entail tipping 1.0745 and eventually competing with demand at 1.0526/1.0638, an area extended from March 2017.

H4 timeframe:

Friday formed a high just shy of supply fixed from 1.0906/1.0878, with Monday digging under support coming in from 1.0821. This shines the headlights on trendline support (1.0637). Beneath here, interest can be seen at a trendline resistance-turned support (1.1147).

Candlestick traders may also note yesterday’s prominent selling wick moulded at the underside of support from 1.0821 echoes the possibility of further downside today.

H1 timeframe:

Pressured amid healthy dollar bidding, EUR/USD brought in demand at 1.0803/1.0814 on Monday. The initial test witnessed a reasonably spirited recovery, reaching highs just shy of 1.0850. In recent hours, however, the lower limits of the aforementioned demand have been tested, suggesting 1.08 may come under fire in the early stages of Asia today. Note also we have the 100-period simple moving average (SMA) lurking just north of price at 1.0823.

Under 1.08, room to push for supply-turned demand at 1.0760-1.0775 is seen, shadowed by 1.0750.

Structures of Interest:

The lack of buying interest seen from monthly demand at 1.0488/1.0912, as well as above the 78.6% Fib level at 1.0745 on the daily timeframe, reveals we may see the daily bearish pennant pattern breached to the downside.

With H4 support at 1.0821 serving up potential resistance, moves lower could be seen on the H4 timeframe. As a result, a breach of 1.08, based on the H1 timeframe, is likely in the offing today, with an initial downside target plotted at H1 supply-turned demand at 1.0760-1.0775, which happens to merge with H4 trendline support (1.0637).