EUR/USD structure points to the upside, towards 1.12

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 familiar supply at 1.1281/1.1208, which entered view Tuesday. Wednesday, nevertheless, observed a rotation to the downside, snapping a four-day winning streak and drawing the candles back to 1.1117/1.1078, specifically the 200-day SMA, currently circulating around 1.1097.

What’s also notable from a technical perspective here is the RSI indicator recently piercing overbought levels, as well as an RSI trendline support-turned resistance entering play.

H4 timeframe:

Supply at 1.1190/1.1172 remains in the frame (houses a deep 88.6% Fibonacci retracement within at 1.1185 – grey), capping upside since the beginning of the week. Supply-turned demand at 1.1109/1.1087 also remains in the mix, doing a good job of containing downside this week. As a result of this, H4 price is currently labelled rangebound, according to our technical studies.

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. Moves lower, on the other hand, shines the spotlight on neighbouring demand at 1.1036/1.1073.

H1 timeframe:

The dollar index regained some of the post emergency rate-cut losses Wednesday, shattering a four-day losing streak. The euro navigated lower ground throughout the day as coronavirus cases continued to pick up in the Eurozone.

1.11 welcomed an approach into the US open, forming a clear-cut hammer candlestick pattern, considered a bullish signal at troughs. Price followed up with a strong bullish rotation candle, closing at highs, though drifted thereafter into the close. Surfacing beneath 1.11, supply-turned demand is visible at 1.1091/1.1080, alongside the 100-period SMA, trading at 1.1094.

With respect to upside levels from here, technical research reveals limited supply until reaching the 1.12 handle. Despite this, 1.1157/1.1145, a support/resistance area, could play a role in movement today, based on its history.

Structures of Interest:

With monthly price eyeing higher levels out of demand, daily price recently testing demand and H4 price fading the lower edge of its range, a break of 1.1157/1.1145 on the H1 is probable. This may encourage breakout buying, with traders’ crosshairs fixed on 1.12, closely followed by H1 supply at 1.1214/1.1204.