Weekly
• Last Candlesticks pattern: Shooting star
• Time of formation: 31 Jul 2017
• Trend bias: Near term up
Daily
• Last Candlesticks pattern: Shooting star
• Time of formation: 2 Aug 2017
• Trend bias: Up
EUR/USD – 1.1613
Despite last week’s initial rebound, the single currency ran into renewed selling interest at 1.1837 and dropped below previous support at 1.1662 late last week, dampening our bullishness and signal early upmove has formed a top at 1.2093, hence consolidation with downside bias is seen for the erratic fall from there to bring retracement of recent upmove to 1.1550, then 1.1500, however, near term oversold condition should limit downside to 1.1465-66 (50% Fibonacci retracement of 1.0839-1.2093) and reckon 1.1370 support would hold and price should stay above 1.1312-18 (previous support and 61.8% Fibonacci retracement).
On the upside, whilst an initial recovery back to previous support at 1.1669 (now resistance) cannot be ruled out, reckon 1.1700 would hold and price should falter below 1.1725 (previous minor support) and bring another decline to aforesaid downside targets. Only above the Kijun-Sen (now at 1.1790) would defer and suggest low is possibly formed instead, risk test of resistance at 1.1837 but break there is needed to add credence to this view, bring another bounce to indicated previous resistance at 1.1880 first. Once this level is penetrated, this would signal the fall from 1.2093 has ended, bring test of the upper Kumo (now at 1.1907) first but resistance at 1.2005 should hold.
Recommendation: Sell at 1.1700 for 1.1500 with stop above 1.1800.
On the weekly chart, last week’s selloff formed a black candlestick and the breach of previous support at 1.1662-69 signals a temporary top has been formed at 1.2093, hence consolidation with downside bias is seen for retracement of recent rise to 1.1500, then 1.1466 (current level of the Kijun-Sen and 50% Fibonacci retracement of 1.0839-1.2093), however, reckon downside would be limited to 1.1400 and reckon 1.1312-18 (previous support and 61.8% Fibonacci retracement) would hold, price should stay above previous minor resistance at 1.1296, bring rebound later.
On the upside, expect recovery to be limited to 1.1662-69 (previous support) and renewed selling interest should emerge around (1.1700-10), bring another decline later. Above 1.1790-00 would risk test of said resistance at 1.1837 but only break of this last week’s high would abort and suggest low is formed instead, bring test of resistance at 1.1880 first. Only a break of 1.1880 would suggest the pullback from 1.2093 top has possibly ended and extend gain to 1.1935-40, then towards 1.2035-40. Having said that, break there is needed to provide confirmation, bring retest of 1.2093.
