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EURUSD July Opening Range Play- Shorts Favored Sub 1.37

EURUSD July Opening Range Play- Shorts Favored Sub 1.37

2014-07-07 18:52:00
Michael Boutros, Strategist
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Talking Points

  • EURUSD testing near-term support
  • Broader outlook bearish sub-1.37
  • Event risk on from US & Germany this week

EURUSD Daily Chart

EURUSD July Opening Range Play- Shorts Favored Sub 1.37

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • Broader EURUSD key reversal off May high remains in focus
  • Reversal at key resistance last week - Daily RSI reversal at 60- bearish
  • Resistance at 1.3673/94- bearish invalidation
  • Breach targets objectives at 1.3735, 1.3805/30
  • Interim support 1.3586- break eyes targets at 1.3519/32 & 1.3476- bullish invalidation
  • Daily RSI support trigger pending
  • Event Risk Ahead: FOMC Minutes on Wednesday and German Consumer Price Index (CPI) on Friday

EURUSD 30min Chart

EURUSD July Opening Range Play- Shorts Favored Sub 1.37

Notes: The July opening range is taking shape with the reversal off key resistance early in the month keeping our focus weighted to the downside while below 1.3673/94. This level is defined not only by the monthly range high, but also represents an array of longer-term moving averages and Fibonacci levels including a 100% extension off the June lows. This suggests that the rally into the late June high was corrective in nature and we look to re-establish short-side exposure while below this threshold.

Bottom line: the pair has come into near-term support at 61.8% retracement of the advance off the June low at 1.3577 and we look for this rebound to offer favorable short entries below 1.3640. A breach above this level looks for a test of the monthly opening range high set last week at 1.3694 with only a move surpassing this threshold invalidating our broader outlook.

The range is rather right with a daily ATR of only 51 pips, so we’ll look to stay nimble and play the ranges while noting event risk later this week with release of the FOMC minutes and German inflation data likely to fuel added volatility in USD and EUR crosses. 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

Technical Relevance

Resistance Target 1

30min

1.3604

23.6% Retracement

Resistance Target 2

30min

1.3622

38.2% Retracement

Bearish Invalidation

Daily / 30min

1.3637/40

50% Retrace / Last Week’s ORL / June 19th High

Break Target 1

30min

1.3652

61.8% Retracement

Break Target 2

Daily / 30min

1.3673/94

July ORH / 100% Ext / 61.8% Retrace / 200DMA

Break Target 3

Daily / 30min

1.3735/47

100 DMA / Jan Swing High / 50% Retrace

Break Target 4

Daily

1.3770/76

Late April Swing Low / 2014 Open

Bullish Invalidation

Daily / 30min

1.3577/86

61.8% & 78.6% Retracement(s) / Weekly ORL

Break Target 1

30min

1.3544

78.6% Retracement

Break Target 2

Daily

1.3519/32

23.6% & 38.2% Retrace(s) / June Close Lows

Break Target 3

Daily

1.3476

2014 Low

Break Target 4

Daily

1.3372

50% Retracement

Average True Range

Daily (20)

51

Profit Targets 13-16pips

*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

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