Following this highly correlated and headline driven scenario, my EUR/USD analysis will probably show similar conclusions as the S&P500, described on the previous post. The two have been moving in tandem.
Following a similar technique, thru a combination of indicators in various real-time charts:
- Volume profile/TPO´s charts (charts 1 & 3), with
- Orderflow represented by Bid/Ask volume ratio and Cumulative Delta indicators, both in longer and shorter-term views (charts 2, 4 & 5)
Chart #1 (below) shows the longer term view. The fact of having such a wide range over the previous week has made things a less clearly defined. My theory is that price, always probing at different levels, is mostly likely to get back again and “fill” those thinly traded areas, at some point. What I don´t know is when ithat will happen. It could be tomorrow, in one weeks, months or years. Price has reached and important resistantr area, where last week´s selloff started. Above, there areas of unfinished business (very low volume areas) which tend also to be re-visited. Those leveles area 1.3860-1.3900. a Longer term view shows, important leveles of resistance until 1.4050-1.4070.
There is clear support all the way below 1.3750, marked by blue rectangles. Since upward and downward moves were so ifast and intense, I would be surprised of the EUR/USD cleant out easily of the range, thus expeting more rotation withing the range, over the coming week. Only a clean breakout of 1.3900 would make me consider a bullish view, an even so, I would be cautios still.
Charts #2 (below) shows the longer term view emebeded with a custom indicator representing the orderflow via the Bid/Ask Volme Ratio. The pair is quite overextended from the keltner channel and this type of situation, generally tends to favor a pullback, at least on the short-term. Another element that favor this stance, is the present negative divergence between price and orderflow. Since the indicators work in real-time, the could change anytime and resolve that divergence. Regardless, i would not be chasing a long a here, by no means, since probabilities do not favor a long. I´ll be updating this analysisi tomorrow night.
I will focus my analysis on the daily timeframe, although for the record, currently (6:30PM, ET), charts are favoring the downside – support leveles are marked in chart #3.
If you are interested in learning about the mothodology I use in ES/S&P500 futures analysis, you can contact me via twitter @demianpack.