Short at 1.0798 - Beautiful confluence!
The EUR made considerable ground against its US counterpart yesterday, after US President Trump’s trade advisor commented that the euro was ‘grossly undervalued’. The move was further exacerbated by lower-than-expected US consumer sentiment and a disappointing Chicago PMI, as well as a decline in the 10-year treasury yield!
The 1.07 psychological handle, along with H4 supply at 1.0765-1.0753 (now acting demand) were consumed amid the recent advance, which, as you can see, allowed price to shake hands with an interesting area of H4 resistance (green zone). In earlier reports we mentioned to keep an eye on this base as it consists of the following structures:
• A H4 Quasimodo resistance level at 1.0796.
• 1.08 handle.
• H4 Fib 88.6% resistance at 1.0810.
• Weekly resistance at 1.0819.
• H4 symmetrical AB=CD approach terminating at 1.0805.
Our suggestions: Although there is a chance that daily action may continue to advance in order to touch gloves with daily resistance at 1.0850, our desk is confident, given the confluence seen around the above noted H4 resistance area, that a bounce down to H4 demand at 1.0765-1.0753 will likely be seen. With that being the case, a market order was executed at 1.0798, with a stop placed 5 pips above the current weekly resistance level at 1.0824.
Data points to consider: US ADP non-farm employment change at 1.15pm, ISM manufacturing PMI at 3pm followed by the Federal Reserve monetary policy decision at 7pm GMT.
The 1.07 psychological handle, along with H4 supply at 1.0765-1.0753 (now acting demand) were consumed amid the recent advance, which, as you can see, allowed price to shake hands with an interesting area of H4 resistance (green zone). In earlier reports we mentioned to keep an eye on this base as it consists of the following structures:
• A H4 Quasimodo resistance level at 1.0796.
• 1.08 handle.
• H4 Fib 88.6% resistance at 1.0810.
• Weekly resistance at 1.0819.
• H4 symmetrical AB=CD approach terminating at 1.0805.
Our suggestions: Although there is a chance that daily action may continue to advance in order to touch gloves with daily resistance at 1.0850, our desk is confident, given the confluence seen around the above noted H4 resistance area, that a bounce down to H4 demand at 1.0765-1.0753 will likely be seen. With that being the case, a market order was executed at 1.0798, with a stop placed 5 pips above the current weekly resistance level at 1.0824.
Data points to consider: US ADP non-farm employment change at 1.15pm, ISM manufacturing PMI at 3pm followed by the Federal Reserve monetary policy decision at 7pm GMT.
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