Interesting price action observed on EUR/USD this morning…

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Weekly gain/loss: -1.17% 
Weekly close: 1.1320

Weekly perspective:

Boasting historical significance as far back as early February 2015 and capping upside action since late October 2018, long standing support/resistance at 1.1465, once again, contained upside last week. In the shape of a near-full-bodied bearish candle, the EUR/USD erased two weeks’ worth of gains and positioned demand at 1.1119–1.1212 in sight as a possible downside target this week.

Daily perspective:

By way of five consecutive bearish candles, recent trade concluded the week within striking distance of support coming in at 1.1302. In play since early September 2016, and capping downside throughout December 2018 and January 2019, this level has ‘market floor’ written all over it on this timeframe. Should we push for lower ground, nonetheless, as the weekly timeframe suggests, demand at 1.1171–1.1220 is next in the firing range (glued to the top edge of the current weekly demand area).

It might also be worth noting a possible ABCD bullish correction (red arrows) is in the process of forming that completes a few pips north of the aforementioned demand zone .

H4 perspective:

Amid early US Friday, the H4 candles faded the underside of December’s opening level at 1.1350, reinforced by a modest US dollar advance observed off lows at 96.45 ( US dollar index ).

For those who read Friday’s morning briefing you may recall the piece underlined a potential sell from 1.1350, having seen both weekly and daily charts expressing interest in lower levels. The report also went on to highlight potential downside targets around the 1.13 handle that boasts additional support out of the daily timeframe from 1.1302.

Well done to any of our readers who managed to jump aboard the move off 1.1350. All three timeframes point to further selling today/early week at least until we shake hands with 1.13.

Areas of consideration:

For traders who remain short, hopefully risk was reduced to breakeven prior to the close of trading Friday. The first take-profit target is 1.13. As mentioned above, this number is likely to enter the mix today or early in the week. A reaction is expected from here given its connection to the daily support at 1.1302, therefore keep eyes on H4 price action for signs of buying (entry/stop parameters can be defined according to the candlestick configuration) as this could offer an opportunity to enter long back up to December’s opening level at 1.1350.

In the event of a push beyond 1.13, however, the next profit target on the H4 scale is seen at support drawn from 1.1271, followed by a Quasimodo support at 1.1240 (both levels not visible on the screen).

Today’s data points: FOMC Member Bowman Speaks.

Source: ICmarkets

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