EUR/USD: Technical outlook and review...
The single currency, as you can see, fell sharply in early trading on news of Italian Prime Minister Matteo Renzi’s resignation amid yesterday’s constitutional referendum. The pair managed to clock lows of 1.0504 before switching tracks and rallying just as sharply against its US counterpart. Several resistances were wiped out during this bullish assault, which ended the day with the unit piercing through a H4 Quasimodo resistance level coming in at 1.0771.
Over on the bigger picture, however, we can see that weekly action is now flirting with a trendline resistance extended from the low 0.8231. In addition to this, it might also pay to remain cognizant of the nearby 2016 yearly opening level at 1.0873 and resistance at 1.0819 lurking just above, as this may encourage a fakeout through the current trendline resistance later on today.
Our suggestions: While shorting from the current H4 Quasimodo resistance seems a reasonable approach given the position of price on the weekly chart, our desk would not be comfortable pulling the trigger here considering that the H4 candles are shaking hands with the H4 supply turned-demand at 1.0759-1.0738. A close below this area would, we agree, open up some space to the downside, but nothing to get excited about as price would then be within striking distance of the daily support at 1.0710! Ultimately, we would need to see a close beyond the H4 broken Quasimodo level at 1.0685 for us to become sellers, since there is little standing in the way of the pair from dropping down to at least the 1.06 handle.
Alternatively, should we see price strike the 1.0830/1.08 neighborhood today, which aligns with weekly resistance at 1.0819, we would consider shorting from here on the basis that a reasonable H4 bearish candle forms. The reason for requiring this confirmation comes from the possibility that a fakeout may be seen above this area to the aforementioned yearly opening level.
Data points to consider: There’s relatively little high-impacting data on the docket today for both the EUR and USD markets.
Over on the bigger picture, however, we can see that weekly action is now flirting with a trendline resistance extended from the low 0.8231. In addition to this, it might also pay to remain cognizant of the nearby 2016 yearly opening level at 1.0873 and resistance at 1.0819 lurking just above, as this may encourage a fakeout through the current trendline resistance later on today.
Our suggestions: While shorting from the current H4 Quasimodo resistance seems a reasonable approach given the position of price on the weekly chart, our desk would not be comfortable pulling the trigger here considering that the H4 candles are shaking hands with the H4 supply turned-demand at 1.0759-1.0738. A close below this area would, we agree, open up some space to the downside, but nothing to get excited about as price would then be within striking distance of the daily support at 1.0710! Ultimately, we would need to see a close beyond the H4 broken Quasimodo level at 1.0685 for us to become sellers, since there is little standing in the way of the pair from dropping down to at least the 1.06 handle.
Alternatively, should we see price strike the 1.0830/1.08 neighborhood today, which aligns with weekly resistance at 1.0819, we would consider shorting from here on the basis that a reasonable H4 bearish candle forms. The reason for requiring this confirmation comes from the possibility that a fakeout may be seen above this area to the aforementioned yearly opening level.
Data points to consider: There’s relatively little high-impacting data on the docket today for both the EUR and USD markets.
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