EUR/USD: Tech outlook
For those who read Wednesday’s piece you may recall that our desk underlined the 1.05/1.0520 area (yellow H4 rectangle) as a promising buy zone. The reason for selecting this base was due to the following converging structures: a round number at 1.05, a H4 trendline support taken from the low 1.0339, January’s opening level at 1.0515, daily support at 1.0520 and let’s not forget that all of this is further reinforced by the weekly support area at 1.0333-1.0502. As is evident from the H4 chart the zone held beautifully! Well done to any of our readers who managed to jump aboard this move.
Going forward, we can see that the H4 candles are now kissing the underside of the H4 mid-way number 1.0550. This level, in our humble opinion, is likely going to give way since there is not only a daily support currently in motion, but also a yearly opening level as well (see above). The next upside objective beyond this mid-way point is December’s opening level at 1.0590, shadowed closely by 1.06, and then the H4 supply at 1.0632-1.0620 that happens to merge with a H4 trendline resistance extended from the high 1.0714.
Our suggestions: Despite H4 price trading at a mid-level resistance, we would not be comfortable selling this market. A H4 close above this number, followed by a retest and a lower-timeframe confirming signal would, however, be something of interest. Ultimately, we’d be looking for either the following to take shape on the lower timeframes to confirm this line: an engulf of supply followed by a retest as demand, a trendline break/retest or simply a well-defined collection of buying tails printed around 1.0550. We typically search for lower-timeframe confirmation between the M15 and H1 timeframes, since most of our higher-timeframe areas begin with the H4. Stops are usually placed 3-5 pips beyond confirming structures.
Data points to consider: EUR CPI data at 10am. US Jobless claims at 1.30pm GMT.
Going forward, we can see that the H4 candles are now kissing the underside of the H4 mid-way number 1.0550. This level, in our humble opinion, is likely going to give way since there is not only a daily support currently in motion, but also a yearly opening level as well (see above). The next upside objective beyond this mid-way point is December’s opening level at 1.0590, shadowed closely by 1.06, and then the H4 supply at 1.0632-1.0620 that happens to merge with a H4 trendline resistance extended from the high 1.0714.
Our suggestions: Despite H4 price trading at a mid-level resistance, we would not be comfortable selling this market. A H4 close above this number, followed by a retest and a lower-timeframe confirming signal would, however, be something of interest. Ultimately, we’d be looking for either the following to take shape on the lower timeframes to confirm this line: an engulf of supply followed by a retest as demand, a trendline break/retest or simply a well-defined collection of buying tails printed around 1.0550. We typically search for lower-timeframe confirmation between the M15 and H1 timeframes, since most of our higher-timeframe areas begin with the H4. Stops are usually placed 3-5 pips beyond confirming structures.
Data points to consider: EUR CPI data at 10am. US Jobless claims at 1.30pm GMT.
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