EURUSD analysis for the week beginning 24th October
As I tweeted last week, the EURUSD daily demand zone was looking incredibly weak with any attempt at a rally being sold off.
Eventually demand was eroded and price made it’s way to the “roadbump” and started to bounce late Friday evening- again this was tweeted well in advance and it’s good to see these concepts playing out.
A few interesting observations on the daily chart which have passed but are still noteworthy: The pivot line at 1.1210 has provided some excellent opportunities for range traders to buy and sell back to the mean – having taken a few of these myself and tweeted them at the time.
Now the wedge has broken down, I am extremely bearish on this pair. Any attempt at a rally should be sold off.
If the roadbump at 1.0871-1.0823 gives an initial bounce, then daily supply at 1.0971-1.1039 should send it down. If that supply does not hold, I’d like to see stops at 1.1066 taken out. The underside of the wedge or supply above that may cause the market to reach higher . The supply zone at 1.1147-1.1202 would make an excellent location to short.
There are plenty of stops to the downside (below swing lows, marked by the red lines). These should open the way to a future daily demand target of 1.0635. It’s a long way off, but at that point I will start looking for the market to turn and buying opportunities.
1 Hour View
On the 1 hour chart, look for price action to confirm an intraday long off the demand roadbump.
Sell daily supply, but for a tighter stop, consider waiting until price reaches the 1.1000 figure (which is also the start of 15 min supply).
If the market aims higher, consider selling supply at 1.1147-1.1202 which will also be an over-shoot of the daily wedge.
These zones are wide, so either take a swing position or look for lower timeframe entries to tighten up the risk.
UPDATE Friday 28th October 2016
As predicted, the EURUSD bounced off the roadbump, made a short-term retracement and ended up at supply. This could be a sell on Monday, but no positions will be opened into the weekend.