Talking Points
- EURUSD reversal off October highs halts at Fibonacci support
- Risk of near-term bounce shifts focus higher – Rallies to be sold below 1.3588
- Bullish invalidation with break / close below 1.33
EURUSD Daily Chart
![Forex_EURUSD_Scalp_Favors_Selling_Rallies_Post_ECB-_Bearish_below_1.3588_body_Picture_2.png, EURUSD Scalp Favors Selling Rallies Post ECB- Bearish below 1.3588](http://media.dailyfx.com/illustrations/2013/11/12/Forex_EURUSD_Scalp_Favors_Selling_Rallies_Post_ECB-_Bearish_below_1.3588_body_Picture_2.png)
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
- EURUSD reversal off key resistance last month still in focus
- Break below channel support rebounds off key support region 1.3291- 1.3305
- Interim resistance at former channel support, 1.3535-1.3576
- Bearish below November opening range high 1.3588
- Support break targets 200DMA at 1.3215 and 1.3156-65
- Note daily momentum at lowest levels since July- Topside trigger warrants caution
- Key Events Ahead: Eurozone 3Q GDP on Thursday
EURUSD Scalp Chart
![Forex_EURUSD_Scalp_Favors_Selling_Rallies_Post_ECB-_Bearish_below_1.3588_body_Picture_1.png, EURUSD Scalp Favors Selling Rallies Post ECB- Bearish below 1.3588](http://media.dailyfx.com/illustrations/2013/11/12/Forex_EURUSD_Scalp_Favors_Selling_Rallies_Post_ECB-_Bearish_below_1.3588_body_Picture_1.png)
Notes: The initial weekly opening range has broken to the upside and while our broader bias remains weighted to the downside below the opening range high, we look for near-term rallies to offer more favorable short entries higher up. Ideally I’d like to see a tag of former channel support (now resistance) with a turn in momentum to offer further conviction on our directional bias. A break below 1.33 warrants short exposure with such a scenario eyeing subsequent support targets.
It’s important to note that last week’s interest rate cut from the ECB came ahead of the 3Q GDP and suggests that the figure may disappoint as the economy is widely expected to grow at a marginal 0.1% during the three months through September. With the ECB’s pledge to keep interest rates at current levels or lower, the forward guidance suggests that the central bank will continue to embark on its easing cycle to stem the risk of deflation. As such, the divergence of the policy outlooks between the Fed and the ECB alone is likely to keep pressure on the EURUSD pair in the medium-term.
* 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 | 1.3452 | 50% Fib Extension |
Resistance Target 2 | Daily / 30min | 1.3475 | Soft Resistance / Pivot |
Resistance Target 3 | 30min | 1.3498 | 38.2% Retracement |
Resistance Target 4 | Daily / 30min | 1.3530/35 | Soft Resistance / 61.8% Ext |
Bearish Invalidation | Daily / 30min | 1.3562/77 | 50% & 23.6% Retracements |
Break Target 1 | 30min | 1.3625 | 61.8% Retracement |
Break Target 2 | Daily / 30min | 1.3709/14 | Feb Highs / 78.6% Retracement |
Break Target 3 | 30min | 1.3768 | 88.6% Retracement |
Break Target 4 | Daily / 30min | 1.3800 | 100% Fib Extension |
Break Target 5 | Daily / 30min | 1.3830 | 61.8% Retracement |
Support Target 1 | Daily / 30min | 1.3420 | 23.6% & 38.2% Retracements |
Support Target 2 | 30min | 1.3370 | 38.2% Fib Extension |
Support Target 3 | Daily / 30min | 1.3345/50 | 100-Day Moving Average |
Bullish Invalidation | Daily / 30min | 1.3292 – 1.3305 | 61.8% Ext / 50% Retrace / Nov Low |
Break Target 1 | Daily | 1.3215 | 200-Day Moving Average |
Break Target 2 | Daily / 30min | 1.3157/65 | 100% Extension / 61.8% Retracement |
Average True Range | Daily | 95 | Profit Targets 22-24pips |
Other Setups in Play:
- USD Scalps Look to Fade Weakness - AUD, NZD, CAD Eye Key Support
- AUDUSD Scalp Looks to Sell Rallies- Bearish below 9570
- USD Setups Heading into November- NZD, JPY Scalp Biases at Risk
- AUDJPY Scalp Setup Eyes Key Support- Bias Bearish Below 93.80
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---Written by Michael Boutros, Currency Strategist with DailyFX
For updates on this scalp and more setups follow him on Twitter @MBForex
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