EUR/USD exhibiting strong technical patterns at the moment

18 thg 6, 2020

EUR/USD:

Monthly timeframe:

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

April spent the best part of the month feasting on the top edge of demand from 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 June extending gains and recently reconnecting with the lower shelf of supply at 1.1857/1.1352 (unites with long-term trendline resistance [1.6038]).

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

Daily timeframe:

Partially altered from previous analysis -

Last week had EUR/USD address a potential reversal zone (PRZ), derived from a harmonic bearish bat pattern (comprised of an 88.6% Fib ret level at 1.1395, a 161.8% BC projection at 1.1410 and a 161.8% Fib ext. level at 1.1462 [red oval]), and rotate lower into the week’s end.

According to the harmonic pattern’s overall structure, price is tipped for more underperformance.

It’s common to see traders sell PRZs and place protective stop-loss orders above the X point, in this case at 1.1495. Common targets fall in at the 38.2% and 61.8% Fib ret levels (legs A/D) at 1.1106 and 1.0926, respectively. Note in between the said Fib levels traders must also contend with the 200-day simple moving average at 1.1025.

In addition to the bearish configuration, the RSI indicator recently exited overbought territory and eyes the 50.00 value.

H4 timeframe:

As expected, sellers softened through familiar support from 1.1226 Thursday to greet demand at 1.1189/1.1158 (prior supply).

Another area that must be monitored is fresh demand coming in from 1.1115/1.1139, uniting with an ABCD formation and trendline support (1.0774).

H1 timeframe:

Upside attempts through 1.1250 proved unsustainable amid early London Thursday, eventually sparking a wave of selling heading into US trade towards 1.12.

As traders digest the possibility of 1.12 giving way, active demand to the left of price under this level appears limited, exposing 1.1150 as feasible support.

Structures of Interest:

The response out of monthly supply at 1.1857/1.1352, along with price respecting the daily harmonic bearish bat pattern and suggesting we may be headed for the 38.2% Fib ret level at 1.1106, promotes further selling on the bigger picture.

Short term, H4 demand at 1.1189/1.1158 is currently feeding a mild recovery, sponsored also by the 1.12 level on the H1. Buyers from here are urged to keep tabs on H4 resistance at 1.1226.

Dips from current price, nevertheless, will likely take aim at 1.1150 on the H1, located just ahead of H4 demand at 1.1115/1.1139 (along with H4 ABCD confluence).