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EUR/USD Price Analysis: Intraday rallies to be sold

EUR/USD Price Analysis: Expect trading to remain mixed and volatile. There is scope for intraday upside pressure, but gains should be limited.

Market highlights from the last week

Friday 15th May: The flash Euro-zone first-quarter reading was confirmed at a contraction of 3.8% with a year-on-year decline of 3.2%. ECB President Lagarde reiterated that the central bank was committed to doing everything needed within its mandate

Monday 18th May: Euro-zone sentiment strengthened sharply late in the European session following proposals by Germany and France for a EUR500bn coronavirus reconstruction plan

Tuesday 19th May: The headline German ZEW economic sentiment index strengthened to 51.0 for May from 28.2 in April which was well above consensus forecasts of 30.0 and the strongest reading since April 2015

Wednesday 20th May: Overall global risk appetite held firm during Wednesday which was important in curbing defensive dollar demand

Thursday 21st May: US initial jobless claims declined to 2.44mn for the latest week from 2.69mn the previous week, although this was above consensus forecasts of 2.40mn

EUR/USD Price Analysis

Let us have a look at the technical viewpoint:

Monthly: April closed the month little net changed with a ranging candle of 860 pips/points. All of April and May’s price action is holding within the lower half of April’s range.

Weekly: We have posted 8 Inside Solders on the weekly chart. This highlights the lack of clear medium-term direction

EUR/USD Price Analysis Daily: Broke the sequence of 4 positive performances on Thursday with follow through selling noted on Friday. The trend of higher lows is located at 1.0805

EUR/USD Price Analysis Intraday 4-hour: Buyers emerged close to the 50% pullback level of 1.0892 (from 1.0775-1.1008). Expect trading to remain mixed and volatile. Previous swing high is located a 1.0976. A rejection here should see further selling to the 78.6% pullback level of 1.0825 (close to the trend of higher highs). This would then offer an intraday Bullish Gartley. 

EUR/USD Price Analysis Outlook: Expect trading to remain mixed and volatile. There is scope for intraday upside pressure, but gains should be limited. Selling at 1.0976 targeting 1.0825 offers a sound reward against risk setup up ‘choppy waters’.

Possible trade setup.

Action: Selling at 1.0976

Stop: 1.1018

Target: 1.0825

Potential return on risk to first target:  R3.5 (reward 151 / risk 42)

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