EUR/USD analysis shows attractive supply in view

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 –

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. Thursday followed through with a stronger-than-expected rotation higher, in line with monthly direction, consequently lifting price deeper within current supply.

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-turned demand at 1.1109/1.1087 remains in the mix, having done a superb job of containing downside this week. As a result of this, fresh demand formed at 1.1119/1.1143 and the unit concluded Thursday grasping the 1.1239 December 31st high.

In the event of a break higher here, buy-stop liquidity may fuel a move to supply at 1.1294/1.1271, drawn from July 2019.

H1 timeframe:

The greenback was hit Thursday with the US dollar index falling beneath 97.00 as the 10-year Treasury yield tunnelled beneath 1% to print a fresh record low of 0.8990%. The single currency performed well, adding 100 points, or 0.93%.

The sequence of higher highs/lows fuelled a move through orders at 1.12 yesterday, settling the day a touch south of supply coming in at 1.1268/1.1255. Traders will also want to note the RSI indicator is seen testing overbought levels.

It is worth noting the current H4 supply zone at 1.1294/1.1271 is positioned around the top edge of daily supply at 1.1281/1.1208, while H1 supply at 1.1268/1.1255 is sited beneath the current H4 supply, though within the limits of the aforementioned daily supply.

Structures of Interest:

H4 supply at 1.1294/1.1271 could be in for some action today. Its an incredibly well-placed zone – see above in bold. However, the pullback from here may be tainted by monthly price eyeing higher levels, with 1.1239 likely to develop support.

What’s also appealing regarding the current H4 supply is buy-stop liquidity above 1.1239 and H1 supply mentioned above at 1.1268/1.1255, as well as both the daily and H1 timeframes showing overbought conditions, in terms of RSI readings.