(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 noteworthy area given the momentum derived from its base – EUR/USD failed to sustain gains and is currently seen revisiting the upper boundary of the said demand.
Although down 1.00% 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, targeting demand-turned supply at 1.1857/1.1352 and long-term trendline resistance (1.6038).
To the downside, however, traders looking beyond the current demand zone likely have crosshairs fixed on a reasonably ‘fresh’ demand base at 0.9581/1.0221. Note this zone boasts history dating back as far as 2003.
Demand at 1.0680/1.0781, an area formed April 2017 which houses a long-term 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.
Thursday’s 100-point gain lifted EUR/USD to an interesting area of resistance on the daily timeframe, comprised of trendline resistance from 1.1239, a trendline support-turned resistance from 1.0981 and a 50.0% retracement value at 1.1003. Also prominent is supply drawn from 1.1117/1.1078, currently mingling with the 200-day SMA.
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.
Thursday had the EUR/USD power into a small base of demand-turned supply at 1.1015/1.1002, following a break of two supply zones at 1.0958/1.0941 and 1.0924/1.0902, both now representing demand areas. Although current supply is void of local confluence, the daily resistances noted above dovetail with one another beautifully.
Europe’s single currency rallied strongly against the buck Thursday, adding 0.98%. The US dollar index continued to explore lower ground, extending losses south of multi-year highs, pressured on the back of soft US Treasury yields. Note longer-term action on the dollar index also has price testing a daily supply-turned demand base at 98.65/98.19.
Technical headlines saw the EUR/USD welcome a test at 1.10, a key figure widely watched in the market, surrounded by a H1 supply area coming in at 1.1007/1.0994. Demand at 1.0933/1.0948 rests close by in the event we dip lower, seated north of the 1.09 handle.
The RSI indicator also recently journeyed into overbought waters, with the 50/100-period SMAs drifting higher since crossing at the beginning of the week.
From the monthly timeframe, further recovery could be on the cards.
Technical levels on the daily timeframe, however, highlights appealing resistance, potentially drawing interest. Similarly, we have demand-turned supply at 1.1015/1.1002 recently making an appearance on the H4 timeframe and the round number 1.10 and supply on the H1 timeframe at 1.1007/1.0994.
The odds a correction materialises today is reasonably high, according to the noted chart studies. As such, bearish themes off 1.10 might be of interest today, using the H4 zone at 1.1015/1.1002 as a base for positioning stop-loss orders.
Disclaimer: The information contained in this material is intended for general advice only.