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

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

EURUSD Daily Chart

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

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

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

• Gold Rally Vulnerable Sub $1361- March Opening Range, NFPs in Focus
• USD Setups Heading Into March Open- Key Rate Decisions, NFPs on Tap
• EURJPY Rally at Risk Sub 141- Weekly Opening Range in Focus
• USDCAD Reversal Underway- Long Scalps Favored Above 1.10
• GBPAUD Weekly Range in Focus- Bullish Scalp Bias at Risk Sub 1.86
• GBPCAD Challenging Feb Range High- Scalp Bias Bullish Above 1.8037

---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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