Empire State Manufacturing Index – EURUSD Technical Analysis Overview

The markets await the Empire State Manufacturing Index this morning; the index is based on surveying a monthly sample of the State’s manufacturing executives and is handled by the Federal Reserve Bank of New York. The index is considered a leading indicator; a reading above zero reflects expansion, and below zero reflects contraction. Last Month, as seen on the chart below, the index reading was the lowest since April 2020 and as low as its reading back in 2008. However, the index fluctuation may involve some seasonality, and it has been below zero for some time, which will add more weight to today’s release.

The expected number is –13.7, an improvement over –43.7 for December 2023. According to the New York Fed, firms responding to the January 2024 Empire State Manufacturing Survey reported that business activity dropped sharply in New York State. New orders and shipments also posted sharp declines. New York State is among the top 10 states in manufacturing jobs and the number of manufacturing companies.

EURUSD – 8 – Hour Chart

• The 8-hour chart reflects that price action is trading within a descending channel, where it continued to find support at the channel’s lower border.
• Price action reversed from a confluence of support (Blue circle) represented by the channel’s lower border (Red line), a trendline extension that goes back to October 2023 (Green line), a historical shortfall level, and the historical monthly Standard pivot point calculation, the support level lies within the range of 1.0720 – 1.0750. It is also worth noting that a zoomed-out view for the same chart shows that the declining channel can be a flag formation for the uptrend (Green lines); we will keep an eye on how it develops.
• Price action broke above its EMA9 and SMA9; however, it is yet to reach its SMA21 on the 8-Hour chart. As for the daily timeframe, price action trades below the SMA9, SMA21, and EMA9.
• The MACD line intersects with its signal line; however, there is no breakout yet, the indicator is currently in line with price action, and no divergences are seen
• The RSI (Daily Close 5) broke above its moving average, which is also in line with price action.
• Price action faces resistance, represented by the S1 Standard calculation and the trendline extension (Green line); a break above this line is essential to justify any upside price action. On the other hand, a potential bullish Shortfall is also identified on the chart; a break below this level may allow price action to retest the channel lower border extension.

EURUSD – Weekly Chart

• The double-top formation previously identified on the weekly chart is complete. Price action broke below the baseline in late January 2024 and has already reached the typical pattern expected target near 1.0730.
• Price action trades below the annual and monthly standard pivot points and EMA9, MA9, and MA21.
• Price action is currently attempting to find support above the 1.0730 area; however, there is no technical indication of whether the level will hold. The support and resistance levels are identified on the above chart.