EUR/USD 🇪🇺🇺🇸 Marginally breaching a three-day bullish phase, Tuesday’s session witnessed Europe’s shared currency pare some of its gains, consolidating around the 1.12 figure into the close as traders await further catalysts. Although German industrial orders came in upbeat, questions over the future remain. Overall, there was a more constructive tone yesterday, as the PBoC guided its CNY fixing firmer against the dollar than analysts were expecting, resulting in a stronger USD.
Technically speaking, the EUR/USD’s H4 candles trade marginally above 1.12 in early trade this morning after discovering a bed of support off trendline resistance-turned support etched from the high 1.1393.
Similar to Tuesday’s outlook, this has theoretically set the stage for further upside towards resistance coming in at 1.1279, closely followed by 1.13. It might also be worth noting we have a 61.8% Fibonacci resistance value lurking just beneath the two levels at 1.1265 (green).
Expanding our perspective to higher-timeframe terrain, we can see weekly price remains trading within the parapets of long-standing demand at 1.1119-1.1295, despite clocking multi-year lows of 1.1026 last week. Continued bidding from this region has the 2019 yearly opening level at 1.1445 to target. Daily action, on the other hand, is seen fast approaching its 200-day SMA (orange), currently circulating around the 1.1297 level.
Areas of consideration:
Assuming the candles remain above 1.12, longs could be the order of the day, targeting the green H4 resistance area mentioned above at 1.13/1.1265. Note the 200-day SMA also merges with this H4 zone, too. Traders are urged to consider waiting for price to cover additional ground above 1.12 before pulling the trigger. Ideally, a long on a retest of 1.12 is eyed, formed in the shape of a H4 bullish candlestick configuration (entry/risk can be determined according to its framework).
Traders can also expect sellers to make an appearance within the green H4 zone at 1.13/1.1265. Whether this is sufficient to send prices back to 1.12 is difficult to judge, given weekly price trades inside demand. For that reason, it’s worth seeing if H4 price chalks up some form of bearish candlestick signal before committing funds.
FX Magazine Market Analysis EURUSD