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EURUSD Opens March at Critical Resistance- ECB / NFP Game Plan

EURUSD Opens March at Critical Resistance- ECB / NFP Game Plan

Michael Boutros, Strategist

Talking Points

  • EURUSD targets critical resistance range- 1.3800/30- Major Inflection Point
  • Focus is on March/weekly opening range- break to validate scalp bias
  • Major event risk on tap from ECB on Thursday & US labor report (NFPs) on Friday

EURUSD Weekly Chart

Forex_EURUSD_Opens_March_at_Critical_Resistance-_ECB_NFP_Game_Plan_body_EURUSD_WEEKLY.png, EURUSD Opens March at Critical Resistance- ECB / NFP Game Plan

EURUSD Daily Chart

Forex_EURUSD_Opens_March_at_Critical_Resistance-_ECB_NFP_Game_Plan_body_EURUSD_DAILY.png, EURUSD Opens March at Critical Resistance- ECB / NFP Game Plan

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • EURUSD tests critical resistance range 1.3800/30- bearish invalidation
  • Breach opens up targets at 1.3895 & 1.40
  • Breach scenario broader weekly targets- 1.4150 & 1.4319-1.4412
  • March/weekly opening range in focus
  • Daily RSI hold sub-60 suggests topside remains at risk here
  • Momentum support trigger pending
  • Support at 1.3660, 1.3565/89 & 1.3456/76- bullish invalidation
  • Key Events Ahead: ECB on Thursday & US labor report on Friday

EURUSD Scalp Chart

Forex_EURUSD_Opens_March_at_Critical_Resistance-_ECB_NFP_Game_Plan_body_EURUSD_SCALP.png, EURUSD Opens March at Critical Resistance- ECB / NFP Game Plan

Notes: The EURUSD has once again approached the 1.3800/30 resistance barrier- a level of technical significance that is defined by the 100% extension if the July 2013 advance and the 61.8% retracement from the decline off the 2011 high. This region has caught the monthly high closes for all three of the last major rallies seen in October, December and February. A longer-dated trendline resistance that dates back to the 2008 high also currently converges on this range and if compromised, would suggest that a more meaningful low was put in last month.

Bottom line: we are looking for a reaction off this key resistance range with the immediate focus now on the March/weekly opening range for validation of our near-term scalp bias. Ideally looking for a new high to sell into, but we’ll respect a break/close below 1.3712/20 with such a scenario eying subsequent support targets towards more critical support at 1.3565. A topside breach above 1.3830 shifts our broader focus higher with topside scalps targeting initial resistance objectives at 1.3892/95 and the 1.40-handle.

It’s important to remain prudent heading into the monthly open. Caution is warranted ahead of key event risk this week with the ECB interest rate decision and the highly anticipated non-farm payroll labor report on tap. The prints are likely to fuel added volatility and could serve as a catalyst for validation of the initial opening ranges. 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

Daily / 30min

1.3767

100% Fibonacci Extension

Resistance Target 2

Daily / 30min

1.3800

78.6% Rtrc / 100% Ext / Oct, Dec, Feb Close High

Bearish Invalidation

Daily / 30min

1.3830

61.8% Retrace / Oct High / 2008 TL Res

Break Target 1

30min

1.3849

61.8% Extension

Break Target 2

Daily / 30min

1.3892/95

December High / 161.8% Ext

Break Target 3

Daily / 30min

1.3935

R2 Monthly Pivot

Bullish Invalidation

30min

1.3712/20

61.8% Retracement / Weekly ORL

Break Target 1

30min

1.3689/90

38.2% Retracement / 61.8% Ext

Break Target 2

Daily / 30min

1.3665

38.2% Fibonacci Ext

Break Target 3

30min

1.3642

Last Week’s Low / Soft Support

Break Target 4

30min

1.3609

61.8% Retracement

Break Target 5

Daily / 30min

1.3550/65

78.6% Retrace / 61.8% Extension

Average True Range

Daily (20)

74

Profit Targets 17-19pips

*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 Webinars on Wednesday & Thursday morning this week on DailyFX Plus (Exclusive of Live Clients) at 1130 GMT (11:30ET)

Interested in learning about Fibonacci? Watch this Video

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