Broad USD softness (USDX – 0.9 percent) and technical buying from weekly channel support, extended from the low $1.1186 (arranged north of weekly Quasimodo support at $1.0778), elevated the currency pair to within reach of weekly resistance at $1.1174.
$1.1174 remains a particularly prominent level this week, well-positioned within the current trend.
The longer-term trend has reflected bearish status since topping at $1.2350 at the beginning of January (2021). This is reinforced by a weekly trendline support breach, drawn from the low $1.0636, together with the break of the $1.1602 November 2020 low (circled) and the pair refreshing year-to-date lows at $1.0806.
Closely joining weekly resistance at $1.1174 is daily resistance at $1.1224. Chart space north of the level unearths area to daily resistance at $1.1483.
A familiar decision point at $1.0788-1.0854 remains on the radar to the downside (as well as intersecting ascending support, drawn from the $1.0340 3rd January low 2017).
An additional observation on the daily scale is the relative strength index (RSI) poised to connect with the lower side of the 50.00 centreline.
Voyaging above 50.00 reveals positive momentum (average gains exceeding average losses) and suggests an approach to weekly and daily resistances ($1.1174-1.1224).
On top of this, technicians will acknowledge the unit has remained beneath its 200-day simple moving average ($1.1531) since mid-June (a bearish stance).
The $1.1139-1.1090 H4 supply received price action on Thursday and, with help from H4 trendline resistance (drawn from the high $1.1495), directed EUR/USD lower on Friday.
Although the supply emphasizes modest (technical) confluence, follow-through selling is questionable according to higher timeframes exhibiting scope to navigate higher.
H4 channel support (taken from the low $1.0806), therefore, may call for attention early week and offer buyers a ‘floor’ to work with.
Assuming buyers take the wheel, an H4 decision point is placed above current H4 supply at $1.1234-1.1195.
A closer inspection of price movement on the H1 timeframe shows Friday came within a whisker of $1.10 before spinning higher. $1.10 is likely to be a watched location early week.
There will be a number of traders looking to fade the psychological level, following Thursday’s higher high at $1.1138 helping to ‘confirm’ an immediate trend higher.
Knowing this, a whipsaw beneath $1.10 into Fibonacci support between $1.0971 and $1.0992 (houses a Quasimodo support from $1.0983) could materialize.
Efforts to travel higher this week on the H1 scale has $1.11 to target, followed by Quasimodo resistance at $1.1138.
The weekly timeframe points to further weakness over the coming weeks, according to the trend. As such, the area between daily resistance at $1.1224 and weekly resistance at $1.1174 might draw bearish interest if tested.
From a short-term perspective—recognising that higher timeframe resistances show room to move higher until at least $1.1174—a whipsaw beneath $1.10 to Fibonacci support at $1.0971-1.0992 is possible on the H1 timeframe and may ignite a short-term bullish scene. What gives the Fibonacci zone extra credibility is H4 channel support dovetails with the area.
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