Wednesday had the EUR/USD unchanged at the close of trade in London. A fleeting move north of the 1.09 handle emerged, yet 1.0908 proved challenging to overcome, sending the pair to H4 support at 1.0857. Note 1.09 links with a 38.2% Fibonacci retracement ratio. Beyond 1.09 we can see H4 resistance plotted at 1.0940, while beneath 1.0857, the 1.08 handle is in sight. Indicator-based traders also have the relative strength index (RSI) languishing beneath overbought waters, unable to breach 68.00. The US dollar index attempted to regain a foothold on the 99.00 handle amidst a rebound in US Treasury yields.
Further out, weekly price is testing resistance at 1.0873, formed by way of the 2016 yearly opening level. This follows last week’s rejection off channel support, taken from the low 1.1109, shaped in the form of a bullish hammer candlestick pattern. A move above 1.0873 could eventually see an approach emerge towards channel resistance, extended from the high 1.1569.
The response from the weekly channel support has so far generated relatively enthusiastic upside, reclaiming daily resistance at 1.0832 (now a serving support) and, in recent sessions, testing daily resistance at 1.0879, the October 1st low. A break highlights resistance at 1.0927, followed by another layer of resistance coming in at 1.0990. Yesterday’s action wrapped up somewhat hesitant, chalking up a modest doji indecision candle.
Well done to any readers who remain long north of 1.08; this was a noted setup to watch for last week. Reducing risk to breakeven and banking partial profits remains a priority, given the test at weekly resistance from 1.0873 and daily resistance at 1.0879.
A retest at 1.09, knowing it aligns with the 38.2% H4 Fibonacci retracement, could be a layer of resistance worthy of shorts today. Though owing to round numbers being prone to whipsaws, conservative traders will likely pursue additional confirmation before pulling the trigger.
Confirmation to the downside can be found on a H4 close south of support at 1.0857. This could also be considered a trigger to liquidate current long positions.
Disclaimer: The information contained in this material is intended for general advice only.