Week ending July 8, 2022
It was a particularly disappointing week for EUR/USD, losing 1.2% and consequently further undermining weekly support between $1.0298 and $1.0445, compounded between Quasimodo resistance turned support at $1.0298 , the January 2 low at $1.0340 (2017) and a 100% Fibonacci projection at $1.0445 (harmonic bullish formation AB=CD).
The lack of bullish interest from the aforementioned area should come as no surprise. The general direction of this market reflects a primary downtrend, setting a series of lower lows and lower highs since 2021. On top of that, seen on the monthly timeframe, the mood is down since the peak in April 2008. The trend, therefore, is probably one of the main factors discouraging any significant buying from the current weekly support.
If the weekly flow remains below the resistance of the Quasimodo support from $1.0778 – capping on the upside since early June – and eventually removes the current support (as the trend suggests), a Fibonacci projection of 1.272% could be targeted below parity at $0.9925.
Merging with current weekly support is Quasimodo support on the daily time frame from $1.0377, a level that welcomed buyers in May and mid-June. Interestingly, the paltry buys derived from the aforementioned daily level remain a concern for all current offers, especially after Friday’s bearish close at the level’s gate.
Gobbling up $1.0377 this week is therefore possible, a move that exposes daily support at $1.0182, located below the current weekly support zone. For those following the Relative Strength Index (RSI), the daily chart shows that the indicator’s value – south of the 50.00 midline – is about to penetrate trendline support. , taken from the 23.08 low.
If the momentum gauge does indeed grab the lower levels, it helps to “confirm” a bearish existence and the oversold gap will command attention, alongside the indicator’s support at 21.87.
Quasimodo’s support from $1.0354 on the H4 time frame came within reach last week, set to the south of Quasimodo’s noted daily support at $1.0377. H4 offer lies above $1.0469-1.0430 (which was tested before the close) with a break here highlighting key resistance at $1.0535-1.0505. Both areas are likely on watchlists this week, having noted the longer lead times favoring sellers at the moment.
A closer reading of the price action over the first half time frame reveals that the currency pair accepted offers at $1.04 on Friday, eliminating the majority of buyers from the surrounding area after hitting a low of 1, $0366. The fake $1.04 might be enough for price to hit the offer at $1.0471-1.0447 and local trendline resistance, taken from the high of $1.0606. Traders can recognize that said offer merges closely with the above mentioned H4 offer at $1.0469-1.0430.
With the weekly timeframe showing minimal respect for support at $1.0298-1.0445, in a strong bearish market, as well as lack of interest seen by Quasimodo’s daily support at $1.0377, indicates a likely downtrend.
In line with longer timeframes, a short-term pullback on H1 to test supply at $1.0471-1.0447 and local trendline resistance could prompt sellers to target the space below. $1.04. Strengthening the H1 area, as highlighted above, is the H4 offer of $1.0469-1.0430.