(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 is seen retesting the upper boundary of the said demand, as we write.
Although down 1.77% on the month and in-line with the primary downtrend, 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.
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 four-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 prominent, from a technical perspective, is trendline resistance (1.1239).
The RSI indicator recovered from channel support and, in recent trade, rose through the connecting channel resistance, highlighting the possibility of moves to overbought territory.
Supply at 1.0924/1.0902 made its debut Wednesday, bolstered by a 38.2% Fibonacci retracement at 1.0898 and local channel resistance (1.0863).
Upside over the past week, formed over gradual higher highs/higher lows, appears to have consumed demand along the way. A decline from the current supply, therefore, could be energetic.
A 50.0% retracement at 1.0936 resides above current supply, representing potential resistance in the event of a move north today.
EUR/USD bulls latched onto a modest bid Wednesday, breaching 1.09 to highs at 1.0908. The 1.0869/1.0858 supply-turned demand zone contained downside, aided by the 50-period SMA, a preferred support so far this week. Buy stops above 1.09 are likely filled, perhaps clearing the river north to resistance at 1.0925 and 1.0950.
ECB’s president Lagarde spoke in Germany, stating a level of trust in the euro is critically important.
New Home Sales out of the US came in better-than-expected, but was largely ignored on the charts. The Census Bureau noted:
Sales of new single‐family houses in January 2020 were at a seasonally adjusted annual rate of 764,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 7.9 percent (±17.8 percent) above the revised December rate of 708,000 and is 18.6 percent (±19.2 percent)* above the January 2019 estimate of 644,000.
From the monthly timeframe, further recovery could be on the cards, with daily price exhibiting scope to resistance at 1.0924. Shorter-term flow, on the other hand, has the H4 candles rejecting a confluent area of supply at 1.0924/1.0902 and H1, albeit appearing weak, remains south of 1.09.
According to chart studies, a break of 1.09 is likely, though follow-through buying may not be anything to write home about, likely capping gains at daily resistance mentioned above at 1.0924.
Disclaimer: The information contained in this material is intended for general advice only.