EUR/USD — Bullish Structure Despite Latest Setback

14 Oca 2019

The breakout of the saturated range structure last week has so far failed to find follow through. My bullish bias and long exposure remain undeterred nonetheless, as the trade ticks enough boxes to remain committed to the long-bias. On the daily chart, we can clearly observe that the bullish resolution comes in line with the divergence in the German vs US bond yield spread, which argues for any retest of the previous area of resistance (on a closing basis) at 1.1440–50 an exceptional area to consider engaging in long-side business. By drawing the volume profile, clear symmetries emerge, allowing us to identify the POC of the multi-month range at 1.1375 area with the extremes at 1.1307–1.1448, hence why it’s so vitally important to hold the latter for the uptrend to resume. This constructive outlook comes in stark contrast with the European fundamentals, but as I’ve argued, this is a movement led by broad-based USD weakness. Also notice, last week’s close beyond 1.15 achieved the creation of a fresh bullish cycle high, with the extension from Jan 3rd low to the recent high greater in magnitude (260 pips) than the previous leg up of 207 pips. This bullish structure has emerged on the back of a debilitating bearish structure seen from Oct to Nov of 2018.