EUR/USD: Technical Analysis Report 05 Feb 2021
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
Following the break of long-term trendline resistance (1.6038) in July, and subsequent break of supply at 1.1857/1.1352 in August, EUR/USD, by way of two back-to-back bullish candles, welcomed 2021 in good health.
While additional upside towards ascending resistance (prior support – 1.1641) may eventually materialise, an 1.1857/1.1352 retest is also on the cards in view of February’s near-1.5 percent correction.
The primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.
Europe’s shared currency tackled trendline support, extended from the low 1.0774, on Thursday and led the unit into the parapets of demand coming in at 1.1923/1.2001.
Adding to the above, traders will acknowledge the RSI appears bound for oversold territory, currently circling the 34.00 neighbourhood.
1.2040/1.2065 serving sellers well as a supply in the early hours of Thursday, aided by a spirited USD advance (the US dollar index registered a fifth successive bullish close), guided EUR/USD aggressively into demand from 1.1962/1.1976 and mildly clipped its lower edge.
Some fresh air is seen south of 1.1962/1.1976 until price shakes hands with 1.1914/1.1932 demand—an area that reinforced dip-buying heading into the end of November (2020).
1.1954/1.1960 demand made an entrance in recent hours and has seen price action modestly pare losses. This, of course, follows the earlier breach of the key figure 1.20, a level widely watched on EUR/USD.
Interestingly, downstream shows a Quasimodo support level in sight at 1.1942.
Out of the RSI, the value spun into oversold space yesterday, touching a low of 21.27. The indicator, as you can see, is on course to exit oversold levels, which may be interpreted as a bullish signal for many.
The upper side of monthly demand at 1.1857 lies in wait in the event sellers drill through remaining bids within daily demand at 1.1923/1.2001. A continuation lower remains on the table all the while the DXY continues to explore higher ground.
On the shorter-term chart, H4 demand at 1.1962/1.1976 having its lower edge nudged yesterday also echoes a bearish narrative. This places a question mark on current H1 demand at 1.1954/1.1960 and throws H1 Quasimodo support in light at 1.1942.