EUR/USD Weekly Technical Analysis
Last week EUR/USD tried to recover but it’s failed. A mix of PMIs, inflation figures and also GDP stand out at the turn of the month. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
The economic recovery is set to continue according to forward-looking PMIs and also Germany’s IFO business survey. However, there still is a divide between Germany and France, where the latter struggles to grow. In the US, durable goods orders have been mixed. Headline GDP came out above expectations at 2.9%, but the internals weremixed.
Direction for today:
With the unit closing the week within shouting distance of the key figure 1.10, the bulls may have their work cut out for them if they intend on pushing things higher here. We say this because not only does 1.10 denote the lower edge of the above said daily supply zone, but it also is positioned nearby a H4 alternate AB=CD completion point at 1.1005, a H4 trendline resistance extended from the high 1.1058 and a H4 78.6% Fib resistance level at 1.1012 (green circle).
In view of the confluence seen around the 1.10 mark, and the uncertainty surrounding the weekly candle’s close, we feel a short from 1.10 is a valid call. To give the trade some room to breathe we would advise placing stops above the current H4 trendline at around the 1.1025 range. If you prefer, however, you could always wait for price to confirm bearish intent here in the form of a H4 bearish close, but this would likely get you in at a worse price and significantly reduce the risk/reward down to the first take-profit target: the H4 mid-way support 1.0950.
GBP/USD Weekly Technical Analysis
GBP/USD had week without any major incident, as the pair closed at 1.2192. There are 10 events on the schedule. Here is an outlook on the major market-movers and an updated technical analysis for GBP/USD.
In the US, durable goods orders were mixed. Advance GDP beat expectations at 2.9%, but the internals were mixed. UoM Consumer Sentiment dropped to its lowest level since September 2015 and missed expectations. In the UK, Preliminary GDP in Q3 edged lower to 0.5%, but this beat the estimate of 0.3%.
In the other side, a move back above 1.2200 handle will expose 1.2250/70 resistance zone while a daily close above it should confirm a temporary bottom in this pair, and at that time another rally in the direction of 1.2330 peak cannot be ruled out.
Direction for the week:
In light of price being caught within a daily range, and weekly action not seen trading at any form of structure, direction is somewhat limited this week. Price action, of course, may take off north from the lower edge of the daily range, but this is a rough finger-in-the-wind assessment.
This is not a particularly attractive market to trade right now. To become buyers, we would like to see the aforementioned H4 supply taken out and by extension, the top edge of the daily range (1.2292), thus, opening the path north up to H4 resistance at 1.2467. To become sellers, however, a close below the 1.21 neighborhood would be ideal, since this takes out the lower edge of the daily consolidation (1.2118) and opens up downside to the key figure 1.20. Nevertheless, do keep in mind that by shorting here, you’re effectively selling into monthly demand.