Week ahead on Euro chart:
As far as we can see, there is not much change from when we last looked
Weekly timeframe perspective: Last week’s action saw price form a bullish engulfing candle a few pips from above the long-term weekly swap level coming in at 1.0411. However, last week’s close 1.0813 was unable to close above the prior week’s opening line at 1.0828, thus leaving us unsure to the validity of this candle pattern.
Nevertheless, if further buying is seen this week, it is possible price will make a bee line for the weekly swap level seen at 1.1109. Let’s see what we can find on the lower timeframes…
Daily timeframe perspective: Since Wednesday last week, the buyers and sellers have been seen pulling for position around a daily swap level resistance seen at 1.0825. This barrier is, as far as we can see, a key obstacle to a move towards the weekly swap level mentioned above at 1.1109.
4hr timeframe perspective: With the weekly chart showing price trading just above support, and the daily timeframe showing resistive qualities (see above), where does this leave us on the 4hr timeframe?
Well, as you can see, price reacted fantastically to the 4hr demand area at 1.0578-1.0618, and managed to break above not one, but two psychological levels (1.0700/1.0800). This assault finally ended with active selling entering the market at around 1.0884, which consequently forced price to retest 1.0800 into the close. Buying from here into potential daily resistance (see above) is not really something our team would be comfortable participating in.
Therefore, our main focus today is to wait for either a close above 1.0900, or failing that, a close below 1.0800.
A close above 1.0900 would likely give us the following:
– An early signal that the daily swap level resistance mentioned above at 1.0825 has been consumed.
– Likely confirming strength to the bullish engulfing pattern seen on the weekly timeframe.
– A clear the path up to 1.1000.
– Potential buying opportunities on any retest seen of 1.0900.
Conversely, if the 1.0800 level gives way, watch for price to retest this level as resistance and look to short this baby (with lower timeframe confirmation of course) down to 1.0700, and potentially the aforementioned 4hr demand seen below.