EURUSD – attempts to extend recovery above daily cloud but downside is still at risk
EURUSD
The Euro is standing at the front foot in early Friday and attempts to extend recovery rally from the previous day, on break above initial barriers at 1.1800 zone (Thursday’s high / 55SMA).
Strong fall which commenced on Monday, after German election results put the single currency under pressure, was contained by the top of thick daily cloud (cloud is spanned between 1.1724 and 1.1530).
Strong support at 1.1720 zone (also Fibo 38.2% of 1.1118/1.2092 ascend) was seen as ideal reversal point of the pullback from 1.2092 peak, as rising thick daily cloud continues to underpin.
Slow stochastic is reversing from oversold territory and supporting scenario.
Extension of recovery on profit-taking after three-day fall needs to clear sideways-moving daily Tenkan-sen / Kijun-sen (1.1875/1.1904 respectively) to confirm higher low and shift near-term focus higher.
Otherwise, limited recovery action would keep the downside at risk, with close below 55SMA to keep negative near-term tone in play and penetration into daily cloud to signal further weakness towards supports at 1.1662 (17 Aug trough) and 1.1605 (50% retracement of 1.1118/1.2092).
The pair is on track for weekly close in red, as well as negative end of the month which could signal further correction of broader uptrend from 1.0340 (2017 low).
Res: 1.1804; 1.1816; 1.1853; 1.1875
Sup: 1.1772; 1.1720; 1.1662; 1.1605
Author
Slobodan Drvenica
Windsor Brokers
Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.
