EURO - SHORT THE BEAR FLAG
Apart from the speech of Fed Chairman Powell which comes up at 7pm EST, not much will happen on Wednesday February 6, 2019 for the EUR/USD in terms of news releases. This provides an opportunity for exclusive use of technical intraday plays for this currency pair. Overnight, the Euro lost ground against the USD, and is now trading at 1.1389 to the greenback. The sentiment for the day is negative: how is this going to pan out as the day goes on?
A look at the daily chart shows that EUR/USD continues to find itself located within the boundaries of an upward channel. With price currently pushing downwards from the upper boundary of the channel, there is still room for more downside movement before support is found at the lower channel boundary.
A look at the hourly chart will provide a microscopic view of the picture on the daily chart. The hourly chart reveals that price action for the day has formed a downward channel (within the channel seen on the daily chart). The bearish price action for the day has broken below the S1 support pivot at 1.1393. However, price has found support at the lower boundary of this channel with the formation of two pinbar candles. Following the pinbar, the 9am UTC hourly candle has pulled upwards to the broken S1 pivot, which is now performing role reversal and is resisting further upside movement to this candle.
The broken S1 pivot may be tested several times during the day by pullback action from the lower channel boundary. We also see the 9-day exponential moving average line, which is acting as a dynamic resistance to the hourly candles. So far, the 9EMA has held firm.
The picture on the hourly chart suggests that further bearishness for the day is in the works. As price action evolves for the day, we will see the lower channel boundary extending lower to meet the S2 support pivot. Along with the S2 support pivot, the lower channel boundary on the 1-hour chart is expected to be a strong support to further downside action. If the broken S1 support pivot (now acting as a resistance) is able to withstand further tests by the pullback action, we expect that price should move down from there (1.1393) to meet support at the S2 support pivot at 1.1372 initially. Such a move would also be in keeping with the prevailing short-term bearish sentiment on the EUR/USD.
Key areas to watch are:
- The S1 support pivot at 1.1393. This was broken to the downside earlier today and is expected perform the expected role reversal of resisting any attempts by price to go back above it.
- The next target for any downside price movement from S1 should be S2 initially, and possibly S3 at 1.1354.
A look at the daily chart shows that EUR/USD continues to find itself located within the boundaries of an upward channel. With price currently pushing downwards from the upper boundary of the channel, there is still room for more downside movement before support is found at the lower channel boundary.
A look at the hourly chart will provide a microscopic view of the picture on the daily chart. The hourly chart reveals that price action for the day has formed a downward channel (within the channel seen on the daily chart). The bearish price action for the day has broken below the S1 support pivot at 1.1393. However, price has found support at the lower boundary of this channel with the formation of two pinbar candles. Following the pinbar, the 9am UTC hourly candle has pulled upwards to the broken S1 pivot, which is now performing role reversal and is resisting further upside movement to this candle.
The broken S1 pivot may be tested several times during the day by pullback action from the lower channel boundary. We also see the 9-day exponential moving average line, which is acting as a dynamic resistance to the hourly candles. So far, the 9EMA has held firm.
The picture on the hourly chart suggests that further bearishness for the day is in the works. As price action evolves for the day, we will see the lower channel boundary extending lower to meet the S2 support pivot. Along with the S2 support pivot, the lower channel boundary on the 1-hour chart is expected to be a strong support to further downside action. If the broken S1 support pivot (now acting as a resistance) is able to withstand further tests by the pullback action, we expect that price should move down from there (1.1393) to meet support at the S2 support pivot at 1.1372 initially. Such a move would also be in keeping with the prevailing short-term bearish sentiment on the EUR/USD.
Key areas to watch are:
- The S1 support pivot at 1.1393. This was broken to the downside earlier today and is expected perform the expected role reversal of resisting any attempts by price to go back above it.
- The next target for any downside price movement from S1 should be S2 initially, and possibly S3 at 1.1354.
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