EUR/USD possibly eyeing lower levels, despite monthly demand.

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

The month of February witnessed EUR/USD revisit the upper limit of demand at 1.0488/1.0912 and chalk up a reasonably appealing (bullish) hammer candlestick pattern – a noteworthy area of demand given the momentum derived from its base. Additional upside is, therefore, achievable, with demand-turned supply at 1.1857/1.1352 and long-term trendline resistance (1.6038) established as upside targets.

To the downside, however, traders looking beyond the current demand zone likely have crosshairs fixed on a reasonably ‘fresh’ demand at 0.9581/1.0221 (boasts history dating back as far as 2003).

The primary downtrend in this market has remained lower since 2008, exhibiting clear lower peaks and troughs.

Daily timeframe:

Partially altered outlook from previous analysis –

Demand at 1.0680/1.0781, an area formed April 2017, elbowed its way into the spotlight in recent trade and, for the time being, remains a dominant fixture on this timeframe.

Supply coming in at 1.1117/1.1078, which intersects with the 200-day SMA, put up little fight Monday, exposing a familiar supply coming in at 1.1281/1.1208, which entered view yesterday. What’s also notable from a technical perspective here is the RSI indicator touching overbought levels as well as an RSI trendline support-turned resistance.

H4 timeframe:

Supply at 1.1190/1.1172 held to lows of 1.1095, capped by supply-turned demand at 1.1109/1.1087. Price rallied strongly from this zone in early US yesterday, strengthened on the back of the US Federal Reserve shocking markets with a 0.5% emergency cut to interest rates to help counteract the economic impact of the coronavirus. This led to price revisiting the noted supply zone and whipsawing through its upper boundary, likely tripping the majority of sellers here and filling any breakout buy orders.

A H4 close above the current supply could tip EUR/USD for more outperformance this week, with some traders betting on an increase to 1.1239 December 31st high.

H1 timeframe:

Tuesday’s Fed-induced rally had price action surpass 1.12 and drive high into the confines of a supply zone at 1.1214/1.1204, formed early January this year. This area sits just north of the current H4 supply zone mentioned above at 1.1190/1.1172 and is glued to the underside of daily supply at 1.1281/1.1208.

Moves higher today could lead to the 1.1239 December 31st high making an appearance, while a rejection has the top edge of daily supply-turned demand at 1.1117, followed by the top edge of H4 supply-turned demand at 1.1109 and then the 1.11 handle on the H1 timeframe.

The RSI is seen producing bearish divergence, with the value recently dipping south of overbought terrain.

Direction:

Monthly price has eyes for higher prices, but in order to reach upside targets, daily price must overcome 1.1281/1.1208.

Lower on the curve, H4 supply at 1.1190/1.1172 is under threat, with eyes for a potential approach to 1.1239 forming. H1 is currently contained by supply at 1.1214/1.1204.

Despite H4 supply suffering a rather monstrous whipsaw yesterday, H1 supply survived and boasts additional support from daily supply. The top edge of daily supply-turned demand at 1.1117, followed by the top edge of H4 supply-turned demand at 1.1109 and then the 1.11 handle on the H1 timeframe, as highlighted above could enter the mix in the event of a downturn today.

A push through 1.12 will likely have traders attempting breakout scenarios; 1.1239, however, may cap upside.