Good morning traders. Trust you all had a good week while I was slacking it off in the Alps.
Glad to be back now looking at different lifts and slides.
First thing I noticed was that the 61.8% Fib we´ve been watching for months on the Daily was tagged subsequent to the dovish ECB and the NFP print hot on it heals. However, during the course of last week we have retraced all of the dip on the ECB and quickly bounced up 100 + pips. I hope some of you nailed it.
It looks like this is the range low line in the sand for eurusd right now.
The macro picture has not changed re monetary policy divergence but it looks to me that our pair has a decent chance of testing 1.14 this week (see Daily Chart analysis below). Whether we get higher is less clear (and of course I could be wrong) but my short term bias is to be long and I´ll be looking for good risk reward levels to buy during the next few days.
We have the FOMC out Wednesday evening and eurozone flash PMI´s on Friday which will be significant. We also have the on going Brexit sitcom to add to the mix.
The Daily Chart
As mentioned above we had a perfect close on the 61.8 Fib. Just wanted to mention it again as its a great example of why I use closes in my chart analysis rather than absolute highs or lows.
Sure there are times when the wick tops and bottoms are traded and need to be accounted for in analysis. But I much prefer the closes as it gives me a better risk reward level to trade at. A close on a level I am interested in gives me more confidence that the level is going to hold for a period of time so that I can take some reward.
It also gives me an invalidation level of the wick high or low to use for stop placement. On the daily chart this is significant. It is less so on lower time frames but using closes is still good for scalping.
Looking at the daily we have two descending trend lines, A and B. We tagged A on Friday. Consequently a move up and a retest from above on A would help to bring B into play.
Moreover we have a mid range level at around the 50% Fib of the range high and low coming in at @ 1.1374 and the 61.8 % Fib at @ 1.1425. The 50% Fib is also the monthly open level.
That is a fair amount of technical confluence to suggest higher prices this week and hence my long bias (as I write on Sunday pre-open). If I´m wrong I´ll know soon enough and be quick to re assess.
The Hourly Chart
Levels and zones as per.
The 1.13 level is clearly acting as a directional pivot. If we re test and move up again I would take that as a good indication that longs have the edge. I we break below and retest from the underside and push back down that would be bearish. I favour the former right now.
Nothing much on the data slate for today so apart from headline noise on China US trade deals and or Brexit it should be a fairly uneventful Monday to kick off the week.
Have a good day :).