Weekly Update- Euro Adjusted Futures-Sep 3–9, 217
Euro Adjusted Futures
When we look at the price action seen this past week we first need to note the lower close from that of the previous week. Closing lower this week at 1.1875 coupled with a test and fail of the critical overhead resistance at 1.1986 starts to send up caution signals as we look at a potential high in the Euro. The price action that will be observed in the month of September will likely set up the rest of the year as either a continuation pattern to higher prices or a trade back into the critical support zone at 1.14. The August lows at 1.1680 will be the trigger that will have us determining the fate of the euro into year end. A trade below this area and more importantly a close below 1.1712 likely sends us lower into the next timing convergence in December on the Monthly timeframe.
With that being said, a test a failure of an overhead resistance level and a lower close is certainly not enough to get us extremely bearish. We continue to see higher highs and higher closes on a monthly level and see no reason why the long-term shift in trend is immediately upon us, or at least until the price point identified above signals that capital is starting to exit.
The important timing convergence we discussed in our Aug 20th weekly report that was showing for that week (Aug 21st), we can see that this particular timing convergence has indeed produced the highest close Year-To-Date at 1.1892, this will be an extremely important number to watch on a closing basis. Should this stand as the highest closing, we would expect this market to trade lower into the next timing convergence during the week of Sep 11th.
The weekly technical chart remains well supported at the 1.1826 level for the coming week. Remaining above this zone on a weekly closing basis, again gives the market support for the next leg higher or at minimum a retest of the overhead resistance at 1.1986. A closing below this area however, does signal that a test of the support zone at 1.1712 becomes likely.
With the market pulling back from the highs of 1.2085 this week and settling in for a close on Friday at 1.1875, we are now looking at a market that has a defined trading zone with overhead resistance at 1.1956 which is the high from the previous breakout point on Aug 25th and support at 1.1797. With the isolated high in place, we do have the ability to trade back to the support zone at 1.1797, however, this does not mean in a straight line. We are seeing the daily timing convergence this week on Sep 6th. With the previous timing convergence on Aug 31st we seen a low of 1.1832 and a close of 1.1912. Since this timing convergence we have seen the market penetrate the highs from Aug 31st but with a lower close at 1.1875. Although these are two conflicting events following the timing convergence, we would ideally see a trade higher into Sep 6th before rolling back over to test the weekly support at 1.1712. Looking for confirmation, we will be looking for a close above the overhead resistance at 1.1956 or a close beneath the support at 1.1797, anything between leaves this market range bound in the short-term.
The technical chart shown above does suggest that the market has support in this immediate area at 1.1850 for Friday but is projecting higher into the 1.19 area for Sep 6th.
As always, thanks for your eyes and time, it is much appreciated.