Weighed on heavily by, what seems to be, never-ending selling pressure on the dollar, the GBP advanced higher on Wednesday. This, as you can see on the bigger picture, has lifted the unit up to both a weekly supply area at 1.3120-1.2957, as well as a daily supply zone drawn from within the weekly base at 1.3058-1.2979.
Swinging over to the H4 chart, recent action has formed a rather eye-catching triple top around the 1.2980 vicinity (see the green circle). Although offers seem to be developing here, let’s be mindful to the fact that there’s a humongous psychological level sitting a mere 20 pips above this resistance at 1.30!
Our suggestions: On account of the above, we believe that the odds of H4 price breaking above the triple-top formation is high. There’s likely a truckload of buy stops planted just above these highs, and if we know that, so do smart money. These stops will highly likely provide enough liquidity to fake price to the 1.30 level for a reasonable selling opportunity. Couple all of this with where the instrument is presently trading on the higher-timeframe structure; we believe 1.30 to be a high-probability sell zone.
Because the fakeout will likely be quick and offer little time to secure additional confirmation at 1.30, we would consider entering at market here and targeting the H4 mid-level support at 1.2950 as an initial take-profit zone.
Data points to consider: UK retail sales at 9.30am. US unemployment claims at 1.30pm GMT+1.
Levels to watch/live orders:
• Buys: Flat (stop loss: N/A).
• Sells: 1.30 region (aggressive stops: 1.3015, conservative stops at 1.3060, above the current daily supply).
Swinging over to the H4 chart, recent action has formed a rather eye-catching triple top around the 1.2980 vicinity (see the green circle). Although offers seem to be developing here, let’s be mindful to the fact that there’s a humongous psychological level sitting a mere 20 pips above this resistance at 1.30!
Our suggestions: On account of the above, we believe that the odds of H4 price breaking above the triple-top formation is high. There’s likely a truckload of buy stops planted just above these highs, and if we know that, so do smart money. These stops will highly likely provide enough liquidity to fake price to the 1.30 level for a reasonable selling opportunity. Couple all of this with where the instrument is presently trading on the higher-timeframe structure; we believe 1.30 to be a high-probability sell zone.
Because the fakeout will likely be quick and offer little time to secure additional confirmation at 1.30, we would consider entering at market here and targeting the H4 mid-level support at 1.2950 as an initial take-profit zone.
Data points to consider: UK retail sales at 9.30am. US unemployment claims at 1.30pm GMT+1.
Levels to watch/live orders:
• Buys: Flat (stop loss: N/A).
• Sells: 1.30 region (aggressive stops: 1.3015, conservative stops at 1.3060, above the current daily supply).
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