H4 ascending wedge suggests further selling

15 thg 4, 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 demand-turned supply at 1.1857/1.1352 and demand at 1.0488/1.0912.

The technical foundation has April rangebound between the two aforementioned price structures; notably, however, the current monthly candle is attempting to regain a foothold from the upper boundary of 1.0488/1.0912.

The primary downtrend has remained in motion since 2008, exhibiting clear lower peaks and troughs.

Daily timeframe:

Partially altered from previous analysis -

Despite yesterday’s decline in the mould of a bearish outside day candle, EUR/USD continues to hold north of a 78.6%/61.8% Fib zone at 1.0745/1.0830 (pink).

Northbound, the 200-day simple moving average (SMA) at 1.1056 offers a layer of resistance. Supply at 1.1239/1.1179 also remains a prominent fixture on this timeframe, intersecting with trendline resistance (1.0879) and sited just north of a 61.8% Fib level at 1.1171

In addition to this, traders may find interest in noting supply coming in from 1.1323/1.1268, having seen a potential AB=CD correction point terminate at 1.1276 (orange).

H4 timeframe:

The euro was left reeling as the US dollar index topped within striking distance of the 100.00 handle yesterday. Supply at 1.1044/1.0966, based on the EUR/USD’s H4 chart, aided Wednesday’s downside move, accompanied by a 50% retracement at 1.0954, a 127.2% Fib ext. level at 1.0973 and a an ascending wedge. Note, the take-profit target out the ascending wedge pattern, measured by taking the base and adding this to the breakout point (green), is still in the mix, despite a late comeback in US hours Wednesday.

H1 timeframe:

Supply at 1.1033/1.0982 (encased within the walls of H4 supply at 1.1044/1.0966) did a superb job capping upside in the early hours of trade Wednesday. This led to a run through the 100-period SMA (1.0937) and a brief spell beneath 1.09, before returning to the underside of the said 100-period SMA and producing a shooting star Japanese candlestick pattern.

Structures of Interest:

As a reminder, on the bigger picture we have monthly price rebounding from demand at 1.0488/1.0912, together with daily price, despite printing a bearish candlestick pattern yesterday, holding north of 1.0745/1.0830.

According to the H4 ascending wedge giving way, however, additional loss could be in the offing today, perhaps reaching support at 1.0831 and beyond. This – coupled with H1 price echoing a bearish vibe off the 100-period SMA – could guide price action beneath 1.09, potentially laying the foundation for moves to 1.0850.