FPM Technical Analysis : EURUSD 25 February 2020

FPM Technical Analysis : EUR/USD (25 February 2020)

Monthly timeframe:

(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 begun tunnelling its way back into the said demand last week.

Although down 2.17% on the month and in-line with the primary downtrend, which has been 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.

Daily timeframe:

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 pencilled in a stronger-than-expected recovery to highs of 1.0863. With respect to resistance on this timeframe, 1.0924 offers a possible ceiling, as does the demand-turned supply zone at 1.1001/1.0946.

The RSI indicator recovered from channel support, and is poised to approach channel resistance, with a break likely triggering further buying to overbought waters.

H4 timeframe:

Monday observed EUR/USD journey to an interesting area of supply drawn from 1.0890/1.0870 – this was the decision point to break the lower edge of the larger area of demand at 1.0832/1.0877 mid-February (no longer applied on the chart). Supply at 1.0924/1.0902 lies close by in the event we press higher, bolstered further by a 38.2% Fibonacci retracement at 1.0898. Note also 1.0890/1.0870 also joins closely with channel support-turned resistance (1.0992).

H1 timeframe:

Intraday action for EUR/USD dipped in initial trade, shaped by way of a modest 33-point opening gap that latched on to the 100/50-period SMAs, around the 1.0808 neighbourhood. The pair bounced firmly just ahead of 1.08 in early London hours, though failed to derive much momentum from Germany’s IFO survey that beat consensus in headline and sub-component terms.

The Institute for Economic Research noted: Sentiment among German managers has improved somewhat. The ifo Business Climate Index rose from 96.0 points (Seasonally adjusted) in January to 96.1 points in February. Although companies assessed their current situation as a little worse, they are less pessimistic about the next six months. The German economy seems unaffected by developments surrounding the coronavirus. The survey results and other indicators suggest economic growth in the first quarter will amount to 0.2 percent.

In recent hours, supply at 1.0869/1.0858 was mildly breached, albeit likely enough to trip buy stops and draw 1.09 into focus. A correction to 1.08 could be on the cards, driving through sell-stop liquidity beneath yesterday’s low at 1.0805. Interestingly, a small demand lurks a few points below 1.08 at 1.0769/1.0789, which could contain any whipsaw through 1.08.

Direction:

Further upside remains a possibility, thanks to daily demand holding at 1.0680/1.0781, and monthly price continuing to trade around the upper boundary of demand at 1.0488/1.0912. As underlined above, daily resistance at 1.0924, as well as the demand-turned supply zone at 1.1001/1.0946, reside as the next higher-timeframe resistances to be aware of this week.

Shorter-term movement has eyeballs on a move to 1.09, after rupturing H1 supply at 1.0869/1.0858. Despite this, a correction to as far south as 1.08 could occur prior to reaching 1.09. 1.08, therefore, offers a potential support to work with today for possible long opportunities, though a rebound off either the 50 or 100-period SMAs is also not out of the question.

Disclaimer: The information contained in this material is intended for general advice only.