Sentiment somewhat steadied Tuesday, prompting a rebound in US Treasury yields and the US dollar index. The DXY reclaimed 96.00 to the upside and is poised to shake hands with 96.50.
EUR/USD, leaving 1.15 unchallenged, dropped through 1.14 in the early hours of trade and retested the latter during London Tuesday. 1.13 made an appearance, and attempted to serve as support, though gave way in recent hours to cross swords with support plotted at 1.1284. The relative strength index (RSI) also crossed 50.00, suggesting further downside could be in store.
The story on the bigger picture has the pair fading the 2019 yearly opening level from 1.1445 on the weekly timeframe – a noted port of resistance, boasting incredibly strong history. This followed last week’s action slicing through long-term weekly channel resistance, extended from the high 1.1569, which may serve as support going forward. With respect to the primary trend, the breakout above the mentioned channel resistance may see the beginning of a long-term trend change take place.
Daily flow came within a point of testing Quasimodo resistance at 1.1496 on Monday, with Tuesday tumbling through support at 1.1349, shaped by way of a near-full-bodied bearish candle. Support is seen reasonably close by at 1.1199, a prior Quasimodo resistance, with a break likely pointing the finger to the 200-day SMA (orange – 1.1101).
Beyond H4 support at 1.1284, traders’ crosshairs are likely fixed on January’s opening level at 1.1222, shadowed closely by 1.12, and then daily support highlighted above at 1.1199. In light of the recent crossing below support at 1.1349 on the daily scale and weekly action fading major resistance, bearish themes south of 1.13 could be an option today. Conservative traders, of course, may wait and see if a retest at 1.13 occurs before committing, strengthening the odds of a favourable trade.
Disclaimer: The information contained in this material is intended for general advice only.