Thursday’s Price Action Was Significant But Does Not Confirm A Broader Recovery
The price action that stood out last week was when EUR/USD made a marginal break below the April low to set a nearly yearly low. However, the move was not sustained. The price action that followed seems to suggest that bears selling a potential breakdown covered their position quickly.
The level I’m focused on, and I presume many others, is resistance at 1.1259. A break above it would imply a double bottom and can signal a much broader recovery.
There is also the upper line of a descending trend channel that has encompassed price action for most of the year. Currently, the two are creating a confluence.
A double bottom points to a measured move target of 1.1415. Personally, I don’t see that happening at this point. The pair has shown range bound type price action for several weeks. There also seems to be a lack of a catalyst for such a move.
A Light Economic Calendar Suggests a Range
There is not a lot on the economic calendar this week, and there is a bank holiday today in the US. I expect a technical break, if one were to occur, will happen next week.
The ECB meeting takes place then and is more likely to present a catalyst. In addition to the ECB, US jobs numbers will also be released. In the meantime, a range seems probable for the week ahead.
Technical Analysis
The 4-hour chart shows important upside resistance at 1.1217. There is confluence as the 200-period moving average is within close proximity.
On an hourly chart, upside momentum is quite evident from recent price action. I see a notable resistance level at 1.1217 as mentioned. There is some minor resistance just above it at 1.1229 which I expect would contain any spikes. Initial support is at 1.1183 and then 1.1170. The main support level to watch out for this week is 1.1150.
I’m anticipating a range in the week ahead so it makes sense to me to fade extremes. EUR/USD would need to get above 1.1259 for a clear bullish bias. On the other hand, a break below 1.1135 signals selling pressure.
