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
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
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.
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
Potential return on risk to first target: R3.5 (reward 151 / risk 42)
Risk Warning - Your capital is at risk - Losses can exceed deposits
Trading spot foreign exchange and futures on margin carries a high level of risk and may not be suitable for all investors. You may lose all your capital. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in spot foreign exchange or futures you should carefully consider your investment objectives, level of experience, and risk appetite. If you are in any doubt about investment or the mechanics of such products, you should seek independent financial advice