EUR/USD – buyers potentially in control short term
EUR/USD:
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
March, evident from the monthly chart, left behind a long-legged doji indecision candle, with its extremes crossing paths with heavyweight demand-turned supply at 1.1857/1.1352 (intersects with a long-term trendline resistance [0.6038]) and demand at 1.0488/1.0912.
April, as you can see, spent the best part of the month feasting on the top edge of 1.0488/1.0912, squeezing out a Japanese hammer candlestick pattern, typically viewed as a bullish reversal signal.
May, on the other hand, is tunnelling back into the said demand, so far disregarding April’s candlestick pattern.
With reference to the primary trend, price has exhibited clear lower peaks and troughs since 2008.
Daily timeframe:
Partially altered from previous analysis -
Thursday bottomed a few pips ahead of the 78.6% Fib level at 1.0745, and clawed back a large portion of Wednesday’s slide. Friday, abruptly off best levels, finished the session unmoved, producing a candle wick.
Another constructive development is, albeit on a large scale for this timeframe, the formation of a bearish pennant pattern between 1.1147/1.0635. It is also worth pointing out the 200-day simple moving average (SMA) circles the upper portion of our pennant configuration.
A decisive daily close beneath pattern structure might give rise to a fresh wave of selling this week. Breaking lower would entail tipping 1.0745 and eventually competing with demand at 1.0526/1.0638, an area extended from March 2017.
H4 timeframe:
Trendline resistance-turned support (1.1147) upheld its position Thursday, despite price dipping a toe in waters beneath 1.0770. Upside gained speed shortly after, toppling resistance at 1.0821. Friday offered a somewhat non-committal tone off 1.0821, clouded by neighbouring supply at 1.0906/1.0878.
Beyond the aforementioned supply, another area of supply around 1.0908 (red arrow) has been noted, though this could simply have been a reaction to the base above it at 1.0937 (blue arrow). Directly above these structures, traders will be looking at supply drawn from 1.1057/1.1013 to provide resistance.
H1 timeframe:
US employment for April shattered record books as COVID-19 causes widespread job loss. Non-farm employment fell by 20.5mln, with unemployment rising to a whopping 14.7%, according to the Bureau of Labour Statistics on Friday.
Liquidity in the form of buy-stops above 1.0850 was tripped heading into US trade, causing price to decline from highs at 1.0875. EUR/USD reclaimed 1.0850 and settled the week around the 100-period simple moving average (SMA) at 1.0836, a few pips ahead of trendline support (1.0766). Demand at 1.0803/1.0814 is also on the radar, which also brings light to the 1.08 handle.
Indicator-based traders may want to note the RSI momentum indicator is seen fast approaching clear support from 46.50.
Structures of Interest:
Long term:
The lack of buying interest seen from monthly demand at 1.0488/1.0912, and Friday failing to generate any follow-through movement, reveals we may see the daily bearish pennant pattern breached to the downside this week.
Short term:
H4 support at 1.0821 is of note owing to its history – buyers will not want to let go without a fight. On this basis, a whipsaw through local H1 trendline support (1.0766) to H1 demand at 1.0803/1.0814 could materialise before buyers step in. This may see H4 supply at 1.0906/1.0878 enter play.
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
March, evident from the monthly chart, left behind a long-legged doji indecision candle, with its extremes crossing paths with heavyweight demand-turned supply at 1.1857/1.1352 (intersects with a long-term trendline resistance [0.6038]) and demand at 1.0488/1.0912.
April, as you can see, spent the best part of the month feasting on the top edge of 1.0488/1.0912, squeezing out a Japanese hammer candlestick pattern, typically viewed as a bullish reversal signal.
May, on the other hand, is tunnelling back into the said demand, so far disregarding April’s candlestick pattern.
With reference to the primary trend, price has exhibited clear lower peaks and troughs since 2008.
Daily timeframe:
Partially altered from previous analysis -
Thursday bottomed a few pips ahead of the 78.6% Fib level at 1.0745, and clawed back a large portion of Wednesday’s slide. Friday, abruptly off best levels, finished the session unmoved, producing a candle wick.
Another constructive development is, albeit on a large scale for this timeframe, the formation of a bearish pennant pattern between 1.1147/1.0635. It is also worth pointing out the 200-day simple moving average (SMA) circles the upper portion of our pennant configuration.
A decisive daily close beneath pattern structure might give rise to a fresh wave of selling this week. Breaking lower would entail tipping 1.0745 and eventually competing with demand at 1.0526/1.0638, an area extended from March 2017.
H4 timeframe:
Trendline resistance-turned support (1.1147) upheld its position Thursday, despite price dipping a toe in waters beneath 1.0770. Upside gained speed shortly after, toppling resistance at 1.0821. Friday offered a somewhat non-committal tone off 1.0821, clouded by neighbouring supply at 1.0906/1.0878.
Beyond the aforementioned supply, another area of supply around 1.0908 (red arrow) has been noted, though this could simply have been a reaction to the base above it at 1.0937 (blue arrow). Directly above these structures, traders will be looking at supply drawn from 1.1057/1.1013 to provide resistance.
H1 timeframe:
US employment for April shattered record books as COVID-19 causes widespread job loss. Non-farm employment fell by 20.5mln, with unemployment rising to a whopping 14.7%, according to the Bureau of Labour Statistics on Friday.
Liquidity in the form of buy-stops above 1.0850 was tripped heading into US trade, causing price to decline from highs at 1.0875. EUR/USD reclaimed 1.0850 and settled the week around the 100-period simple moving average (SMA) at 1.0836, a few pips ahead of trendline support (1.0766). Demand at 1.0803/1.0814 is also on the radar, which also brings light to the 1.08 handle.
Indicator-based traders may want to note the RSI momentum indicator is seen fast approaching clear support from 46.50.
Structures of Interest:
Long term:
The lack of buying interest seen from monthly demand at 1.0488/1.0912, and Friday failing to generate any follow-through movement, reveals we may see the daily bearish pennant pattern breached to the downside this week.
Short term:
H4 support at 1.0821 is of note owing to its history – buyers will not want to let go without a fight. On this basis, a whipsaw through local H1 trendline support (1.0766) to H1 demand at 1.0803/1.0814 could materialise before buyers step in. This may see H4 supply at 1.0906/1.0878 enter play.
Penafian
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