Talking Points
- EURUSD responds to long-dated trendline- immediate focus is higher
- Scalps target topside correction / short entries higher up
- Event risk on tap this week
EUR/USD Daily Chart
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
- EURUSD responds to 2011 trendline- Recovery shifts immediate focus is higher
- Broader downtrend remains intact sub-October trendline resistance
- Resistance (possible short entries) at 1.26, 1.2640 & 1.27
- Support objectives at 1.2466, 1.2414 & 1.2315
- Daily RSI divergence / former resistance-trigger now support- constructive
- Numerous resistance/support triggers pending
- Event Risk Ahead: Eurozone Retail Sales and US ADP Employment & ISM on Wednesday, ECB on Thursday, NFP on Friday
EUR/USD 30min Chart
Notes: The EURUSD continues to trade within the confines of a well-defined descending Andrew’s pitchfork formation off the October high and although our broader bias remains weighted to the downside, near-term divergence and a breach above the reaction bisector shifts the immediate focus higher. We’ll look to play longs into the 1.26 handle / pitchfork resistance with only a breach above challenging our broader downside bias on the euro.
Bottom line: we’ll favor buying dips while above the pitchfork reaction line with a move into 1.2600 – 1.2640 likely to offer more favorable short entries. A break below 1.25 puts the short side back into focus with such a scenario eyeing support targets into 1.2414 and below. Caution is warranted heading into key event risk this week with the ECB Interest Rate Decision and the US Non-Farm Payrolls report on Friday likely to fuel added volatility in EUR and USD based pairs. Follow the progress of trade setups like these and more throughout the trading week with DailyFX on Demand.
* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.
Key Threshold Grid
Entry/Exit Targets | Timeframe | Level | Technical Relevance |
Bearish Invalidation | Daily / 30min | 1.2601/09 | 61.8% Ext / 50% & 38.2% Retracement(s) |
Break Target 1 | 30min | 1.2642 | 61.8% Retrace / ~Pitchfork Resistance |
Break Target 2 | 30min | 1.2662 | 50% Retracement |
Break Target 3 | Daily / 30min | 1.2699 - 1.2714 | 78.6% & 61.8% Retrace(s) / R1 Monthly Pivot |
Break Target 4 | Daily / 30min | 1.2743 | 2013 Stretch Low |
Break Target 5 | 30min | 1.2770 | 10/29 Swing High |
Break Target 6 | Daily / 30min | 1.2790/95 | 10/9 Swing High / 78.6% Retrace / 50DMA |
Support Target 1 | 30min | 1.2543 | 23.6% Retrace / ~ Pitchfork Bisector |
Bullish Invalidation | 30min | 1.2496 – 1.25 | 10/3 Low / 100% Ext |
Break Target 1 | Daily / 30min | 1.2466 | 78.6% Retracement (2012) |
Break Target 2 | 30min | 1.2438 | Weekly ORL |
Break Target 3 | Daily / 30min | 1.2410/14 | 2.618% Extension / S1 Monthly |
Break Target 4 | Daily | 1.2306/15 | 2012 Low Week Close / S2 Monthly |
Break Target 5 | Daily | 1.2265 | 88.6% Retracement |
Break Target 6 | Daily | 1.2202 | 61.8% Extension (2011) |
Break Target 7 | Daily | 1.2043/95 | 2012 Lows / 2010 Low Week Close |
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Average True Range | Daily (20) | 113 | Profit Targets 26-29pips |
*ORH: Opening Range High
*ORL: Opening Range Low
Other Setups in Play:
- NZDUSD Scalps Target 2013 Low- Breakdown Risk Below 7800
- USDJPY Presses Resistance Ahead of BoJ- Support at 108.87
- GBPJPY Long Scalps at Risk Ahead of UK GDP- 174 in View
- NZDCAD Outside Reversal Day Favors Short Scalps Sub-9050
- EURCAD Hits Target- Long Scalps Eye 1.4457 Resistance
- EURJPY Key Outside Reversal Shifts Near-term Focus Higher
---Written by Michael Boutros, Currency Strategist with DailyFX
For updates on this scalp and more setups follow him on Twitter @MBForex
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