EUR/USD: Levels, Ranges, Targets
Despite oversold EUR/USD overall, massive hurdles exist to the upside beginning with 1.1196 and 1.1224 at the 100 day average. Both are the big break points this week to see EUR/USD higher to target the level at 1.1279, Range break at 1.1340 and 1.1376. But the price at 1.1198 faces a tough break point first at 1.1166.
The line at 1.1376 is the 3 month line and began last Sunday at 1.1487 and 1.1411 last Thursday. This line is descending quickly by the day on current prices and should hover during the week between 1.1350 ish to 1.1420 and provide solid resistance.
On the downside, EUR/USD faces a rough break point today at 1.1064. This line will not only hover by a few pips all week as the line is dynamic but a break will open the flood gates short to target 1.1019, 1.0978, 1.0946 and 1.0902.
Overall EUR/USD is contained between big breaks at 1.1064 – 1.1196 and 1.1224.
In the larger context, EUR/USD for the past few weeks has been fighting against overbought V oversold on its own price curve. Reason for this struggle is due to the long length of time to normalize after the last Draghi cut. This factor is inherent in EUR/USD and born inside its structural DNA.
Why we saw 1.1400’s was not only the gap in the curve but Yellen helped drive prices higher. EUR/USD rose inside overbought and a rare, rare day to see such a move but it also explains why the drop from 1.1400’s to current 1.1100’s. The curve is now fairly normalized and overbought throughout the curve as the gap is closing fast. What this means is a sell rally approach overall as EUR/USD is heading far lower over time.
The Bottom over the next day is found at 1.1059 and adds as a confluence of support to 1.1064. So 1.1059 and 1.1064. How price travels to 1.1059 is by breaks at 1.1087 and 1.1073.
Upper targets are 1.1141 and 1.1199. Despite the 1.1199 target, the points at 1.1196 and 1.1224 are falling from above. As long as price remains below, both lines will continue to fall by a few pips each trading day over the week. What 1.1141 means is a range point exists at 1.1166. So 1.1141 and 1.1166 again forms thick resistance and should povide a good sell and reverse opportunity.
First of the month is here this week which means time for monthly trades to post.
Brian Twomey, Inside the Currency Market, btwomey.com