Healthy tone above 1.11 seen on EUR/USD

31 thg 5, 2020

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, recovered off worst levels and wrapped up a few pips shy of monthly highs.

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

Daily timeframe:

Partially altered from previous analysis -

Against the $, the euro voyaged into positive terrain last week, dethroning the 200-day simple moving average at 1.1010.

Supply at 1.1239/1.1179, therefore, may be something to work with this week, stationed under another area of supply at 1.1323/1.1268 and trendline resistance (1.0879). What’s also technically appealing is the 127.2% Fib ext. level at 1.1286 and 78.6% Fib ret level from 1.1310.

H4 timeframe:

Amidst broad dollar losses, Thursday cruised through a well-grounded supply at 1.1057/1.1013 and tackled trendline resistance (1.0968). This unearthed another area of supply coming in from 1.1189/1.1158, a rally-base-drop supply zone that unites closely with a 161.8% Fib ext. level at 1.1154.

As you can see, Friday faced intraday pressure ahead of the aforesaid supply, suggesting retest scenarios may occur at the recently penetrated trendline resistance and 1.1057/1.1013 this week.

H1 timeframe:

Upside momentum slowed as we headed into month-end flow Friday, cementing a peak ahead of 1.1150 before reverting to a defensive play. Late US saw 1.11 enter the field with short-term movement trekking to lows at 1.1081, testing channel support (prior resistance – 1.0991) and swarming sell-stop liquidity. Beyond current supports, 1.1050 may offer a base to consider, a level plotted ahead of demand at 1.1033/1.1016 (prior supply).

Buyers, as you can see, attempted to reclaim 1.11, but failed to register anything noteworthy. In fact, candlestick traders will note the Japanese shooting star candlestick pattern off highs at 1.1108, considered a bearish signal.

Indicator-based traders may acknowledge the RSI oscillator forming support off its 50.00 point.

Structures of Interest:

Long term:

Monthly price displays scope to climb this week, finding a footing out of demand at 1.0488/1.0912.

Daily price also appears to be gearing up for an approach to supply at 1.1239/1.1179 after manhandling the 200-day simple moving average at 1.1010 last week.

Short term:

Before turning higher, traders are urged to note the possibility of a retest developing at H4 trendline support/demand at 1.1057/1.1013, with an upside target resting at H4 supply from 1.1189/1.1158.

Should H1 buyers regain footing above 1.11, however, we could see buyers enter the fold quicker than expected and run for 1.1150 and beyond, according to the bigger picture.