Well done to those who caught longs off the 50-period SMA!

25 de fev. de 2020

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Despite a healthy attempt at recovery from demand at 1.0488/1.0912 in October 2019 – a particularly noteworthy area given the momentum derived from its base – EUR/USD failed to sustain gains and begun tunnelling its way back into the said demand last week.

Although down 1.86% on the month and in-line with the primary downtrend, which has been lower since 2008, we cannot rule out the possibility of fresh upside attempts from current demand.

Additional structure worth noting on the monthly timeframe is demand-turned supply at 1.1857/1.1352, a long-term trendline resistance (1.6038) and a reasonably ‘fresh’ demand area coming in at 0.9581/1.0221. Note this area boasts history dating back as far as 2003.

Daily timeframe:

Partially altered outlook from previous analysis –

Demand at 1.0680/1.0781, an area formed April 2017 which houses a 127.2% Fibonacci ext. point within at 1.0724, elbowed its way into the spotlight late last week and remains a dominant fixture on this timeframe. Exhibiting a three-day winning streak, resistance on this timeframe becomes a factor around 1.0924, as does the demand-turned supply zone seen at 1.1001/1.0946. Also notable from a technical perspective is trendline resistance (1.1239).

The RSI indicator also recovered from channel support, and recently split the connecting channel resistance, highlighting the possibility of moves to overbought territory.

H4 timeframe:

Supply drawn from 1.0890/1.0870, also joins closely with channel support-turned resistance (1.0992), contained upside throughout Asia and most of Europe Tuesday. Having shown resilience off session lows at 1.0830, however, the pair witnessed a resurgence of bidding and overthrew the said channel resistance, driving deep into supply underscored above at 1.0890/1.0870.

Supply at 1.0924/1.0902 lies close by in the event we press higher, bolstered by a 38.2% Fibonacci retracement at 1.0898.

H1 timeframe:

Tuesday’s assessment of intraday flow on EUR/USD underlined the possibility of a move forming to 1.09, after moderately splitting H1 supply at 1.0869/1.0858. The report went on to state a correction to as far south as 1.08 may emerge though a rebound off either the 50 or 100-period SMAs was also not out of the question.

The 50-period SMA, as can be seen from the chart, provided support, guiding the H1 candles above the current H1 supply to highs at 1.0890. Also aiding upside was the following data events:

• Fifth District manufacturing activity softened in February, according to the most recent survey from the Richmond Fed. The composite index fell from 20 in January to −2 in February. All three components of the composite index — shipments, new orders, and employment — moved lower from January – The Federal Reserve Bank of Richmond.

• The Conference Board Consumer Confidence Index improved slightly in February, following an increase in January. The Index now stands at 130.7 (1985=100), up from 130.4 in January. However, do note this release came in below expectations, weighing on the buck and propping up the single currency.

Direction:

Those who managed to secure long positions off the said 50-period SMA yesterday have the option of banking partial profits and reducing risk to breakeven ahead of 1.09. The H1 supply-turned demand at 1.0869/1.0858 may also serve as an intraday floor today, shielding current long positions.

Beyond 1.09, traders must contend with H4 supply 1.0924/1.0902 – note the top edge of this supply denotes daily resistance, followed by daily supply at 1.1001/1.0946.