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EURUSD Fails at Key Resistance- Short Scalps Favored Sub 1.37

EURUSD Fails at Key Resistance- Short Scalps Favored Sub 1.37

2014-02-26 21:12:00
Michael Boutros, Strategist
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Talking Points

  • EURUSD struggles below key technical resistance 1.3767
  • Weekly opening range support break shifts scalp bias to the short-side
  • Event risk on tap from Eurozone & US heading into month-end

EURUSD Daily Chart

Forex_EURUSD_Fails_at_Key_Resistance-_Short_Scalps_Favored_Sub_1.37_body_Picture_2.png, EURUSD Fails at Key Resistance- Short Scalps Favored Sub 1.37

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • EURUSD reacts to key Fibonacci resistance at 1.3767
  • Daily RSI failure to mount 60 / Support trigger break – bearish
  • Weekly opening range support break- bearish
  • Near-term support 1.3660- Break targets objectives at 1.3590/1.3613, 1.3515 & 1.3457/76
  • Breach above 1.3767 resistance (bearish invalidation) targets 1.38, 1.3830 & 1.3895
  • Key Events Ahead: German Inflation & Employment, Eurozone Consumer Confidence& US Durable Goods tomorrow, Eurozone Unemployment & US GDP data on Friday

EURUSD Scalp Chart

Forex_EURUSD_Fails_at_Key_Resistance-_Short_Scalps_Favored_Sub_1.37_body_Picture_1.png, EURUSD Fails at Key Resistance- Short Scalps Favored Sub 1.37

Notes: An outside reversal day on February 6th shifted our focus to the topside in the EURUSD with the pair completing a 100% extension of the advance off the February low at 1.3767. The euro has since traded in a tight range below this mark with daily RSI failing to hold above the 60-threshold before breaking a support trigger dating back to the January low.

The pair has now made a weekly opening range break to the short-side just below key resistance at 1.3767. Our immediate focus is lower on the pair while below 1.3707 with only a breach above 1.3767 warranting long-side exposure. The euro came into an important support zone today defined by the 38.2% retracement of the February advance at 1.3660 and we’ll let intra-day RSI reset to offer more favorable short triggers. With time cycle analysis also turning heavy here, we’ll look to sell rallies / breaks of support while below the weekly range low.

It’s important to remain prudent heading into the close of the week with end-of-month flows and key data prints later this week from the Euro zone & the US likely to fuel added volatility.Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

Entry/Exit Targets

Timeframe

Level

Significance

Resistance Target 1

30min

1.3684/89

50% Retracement / 61.8% Ext

Resistance Target 2

30min

1.3707

Weekly ORL

Resistance Target 3

30min

1.3733

61.8% Retracement / Feb 19th Close

Bearish Invalidation

Daily / 30min

1.3767

100% Extension / Weekly ORH

Break Target 1

Daily / 30min

1.3800/03

100% Extension / 78.6% Retrace / 2013 Close High

Break Target 2

Daily / 30min

1.3830

61.8% Retrace / 2008 TL Resistance

Break Target 3

30min

1.3849

61.8% Fib Extension

Break Target 4

Daily / 30min

1.3892/95

2013 High / 1.618% Fib Extension

Bullish Invalidation

Daily / 30min

1.3659/64

38.2% Retrace / 50% Fib Extension

Break Target 1

Daily / 30min

1.3620/24

Nov High / 100DMA / 50% Retracement

Break Target 2

Daily / 30min

1.3589

61.8% Retracement

Break Target 3

30min

1.3561

February 12th Swing Low / Soft Support

Break Target 4

30min

1.3539

78.6% Retracement

Break Target 5

Daily / 30min

1.3515

61.8% Fibonacci Extension

Average True Range

Daily (20)

72

Profit Targets 15-18pips

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list

Join Michael for Live Scalping Webinar on Thursday morning on DailyFX Plus (Exclusive of Live Clients) at 1130 GMT (11:30ET)

Interested in learning about Fibonacci? Watch this Video

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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