Weekly closing price: 1.2455
Over the course of last week’s movement, the single currency managed to record its seventh consecutive weekly gain!
While this is an incredibly impressive run, weekly price (once again) concluded the week closing within the walls of a strong-looking weekly supply area at 1.2569-1.2287, along with monthly price on the US dollar index remaining above support at 88.50. Not only this, traders may have also noticed the weekly Fibonacci resistance cluster (green lines) seen circling around the top edge of the current weekly supply:
• 61.8% Fib resistance at 1.2604 taken from the high 1.3993.
• 50.0% Fib resistance at 1.2644 taken from the high 1.4940.
• 38.2% Fib resistance at 1.2519 taken from the high 1.6038.
The story on the shows that daily flow remains confined between a daily Quasimodo plotted at 1.2495 and a daily support at 1.2359 (note here that the daily Quasimodo is closely aligned with the weekly 38.2% Fib resistance at 1.2519). In the event that 1.2495 gives way this week, the next upside target can be seen at 1.2626: a daily resistance (not seen on the screen), whereas a break below 1.2359 has the daily at 1.2246-1.2164 to target.
On Friday, the US non-farm payrolls report showed that the economy added 200K new jobs in January, beating the 181K consensus. As a result of this, the greenback strengthened and the euro pressed lower from a H4 127.2% Fib ext. point at 1.2512/1.25 handle, reaching lows of 1.2409. Despite this, as you can see, the pair managed to pare intraday losses amid US afternoon trading, as the dollar surrendered a share of its post-NFP gains.
Potential trading zones:
With weekly supply (along with the weekly Fib zone) and the daily Quasimodo still in play, a downside move is a possibility this week.
According to our technicals, the H4 127.2% Fib ext. point at 1.2512/1.25 handle (green area) is still a valid sell zone. Waiting for additional candle confirmation (full or near-full-bodied H4 bear candle), however, might be an idea, simply because the area’s orders may be weak due to Friday’s reaction. The first take-profit target from this angle could be set at the H4 support extended from the low 1.2165/1.24 handle.
Data points to consider: ECB President Draghi speaks at 4pm; US ISM non-manufacturing PMI at 3pm GMT .