EUR/USD: We favor the bears at this time...
During the course of yesterday’s sessions, the H4 candles remained sandwiched between a supply at 1.0828-1.0814 and a support area drawn from 1.0797-1.0780. Seeing as price concluded the day within the walls of this support area, there’s a possibility that the bulls may attempt to lift the pair north today. While this may be true, we believe the bears could have the upper hand here for two reasons:
1. The spike seen below the support area likely activated a truckload of sell stops (black arrow), and thus potentially may have weakened bids here.
2. Higher-timeframe structure shows that the major recently crossed paths with a weekly resistance barrier coming in at 1.0819 that stretches as far back as mid-2015. Adding to this, the closest higher-timeframe support structure does not come into view until we reach the daily support area formed at 1.0714-1.0683.
Our suggestions: In view of the above points, we believe that a reasonably strong bearish bias is present. Nevertheless, before our desk can become sellers, a H4 close will need to be seen beyond the current H4 support area. This – coupled with a strong retest to the underside of this zone would, in our humble opinion, be enough to justify a sell, targeting the H4 demand at 1.0705-1.0723 (positioned around the top edge of the aforementioned daily support area).
Data points to consider: US jobless claims at 12.30pm, Fed Chair Janet Yellen speaks at 12.45pm, US new home sales at 2pm, FOMC member Kashkari speaks at 4.30pm, FOMC member Kaplan speaks at 11pm GMT.
Levels to watch/live orders:
• Buys: Flat (stop loss: N/A).
• Sells: Watch for price to engulf 1.0797-1.0780 and then look to trade any retest seen thereafter (stop loss: dependent on the rejection candle, as we’d look to place it beyond the rejection candle’s wick).
1. The spike seen below the support area likely activated a truckload of sell stops (black arrow), and thus potentially may have weakened bids here.
2. Higher-timeframe structure shows that the major recently crossed paths with a weekly resistance barrier coming in at 1.0819 that stretches as far back as mid-2015. Adding to this, the closest higher-timeframe support structure does not come into view until we reach the daily support area formed at 1.0714-1.0683.
Our suggestions: In view of the above points, we believe that a reasonably strong bearish bias is present. Nevertheless, before our desk can become sellers, a H4 close will need to be seen beyond the current H4 support area. This – coupled with a strong retest to the underside of this zone would, in our humble opinion, be enough to justify a sell, targeting the H4 demand at 1.0705-1.0723 (positioned around the top edge of the aforementioned daily support area).
Data points to consider: US jobless claims at 12.30pm, Fed Chair Janet Yellen speaks at 12.45pm, US new home sales at 2pm, FOMC member Kashkari speaks at 4.30pm, FOMC member Kaplan speaks at 11pm GMT.
Levels to watch/live orders:
• Buys: Flat (stop loss: N/A).
• Sells: Watch for price to engulf 1.0797-1.0780 and then look to trade any retest seen thereafter (stop loss: dependent on the rejection candle, as we’d look to place it beyond the rejection candle’s wick).
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