1.1233 worked beautifully, where next???
Shortly after the market opened, the shared currency ran into a strong floor of bids around H4 support drawn from 1.1233, consequently forcing the pair to retest the 1.13 handle going into the close. Well done to any of our readers who managed to pin down a position from this line as it was, alongside the H4 support seen below at 1.1219, a noted move to watch out for in our previous report.
Given that daily action just rebounded from demand at 1.1242-1.1202, there is a chance that the 1.13 line could be taken out today. Assuming this comes to fruition a long position will then be considered on any retest seen thereafter, targeting H4 resistance at 1.1367 (sits two pips below daily supply at 1.1446-1.1369). The only grumble we have regarding this potential trade setup is that weekly price remains trading from supply seen at 1.1533-1.1278. And knowing that this area has capped upside since May 2015 (see red arrows), we feel that the currency will eventually drive lower to touch base with support penciled in at 1.0796 in the near future. Therefore, we would strongly advise our readers to only trade above 1.13 with lower timeframe confirmation. This, as we’ve mentioned in past reports, could be in the form of an engulf of supply followed by a retest, a trendline break/retest or simply a collection of buying tails around support. Stops are usually placed 5-10 pips beyond confirming structures thus allowing the trade room to breathe.
Given that daily action just rebounded from demand at 1.1242-1.1202, there is a chance that the 1.13 line could be taken out today. Assuming this comes to fruition a long position will then be considered on any retest seen thereafter, targeting H4 resistance at 1.1367 (sits two pips below daily supply at 1.1446-1.1369). The only grumble we have regarding this potential trade setup is that weekly price remains trading from supply seen at 1.1533-1.1278. And knowing that this area has capped upside since May 2015 (see red arrows), we feel that the currency will eventually drive lower to touch base with support penciled in at 1.0796 in the near future. Therefore, we would strongly advise our readers to only trade above 1.13 with lower timeframe confirmation. This, as we’ve mentioned in past reports, could be in the form of an engulf of supply followed by a retest, a trendline break/retest or simply a collection of buying tails around support. Stops are usually placed 5-10 pips beyond confirming structures thus allowing the trade room to breathe.
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