GBP/USD:
Largely emulating EUR/USD movement, the GBP/USD engulfed a H4 support area at 1.2606-1.2646 and confronted 1.26 as price headed into Thursday’s close.
In Thursday’s morning brief, the piece highlighted the following (potential) scenario:
Although some traders are likely looking to buy within the H4 support area at 1.2606-1.2646, given it has a connection with the top edge of weekly demand at 1.2365-1.2615, a fakeout through this area to the nearby 1.26 handle remains a possibility. This is likely due to diminished buying power from 1.2606-1.2646 from last week’s attempt at an advance (23rd) and the collection of stop-loss orders residing beneath it.
For that reason, conservative traders may wish to adopt a patient approach and wait and see if the candles are drawn to 1.26 before taking action. An ideal scenario would be for H4 price to print a hammer formation (or any notable bullish candlestick pattern) off 1.26, thus confirming buyer intent and simultaneously providing traders a structure to base entry and risk levels from.
With the above in mind, the market printed a half-hearted H4 hammer formation upon testing 1.26 yesterday and boasted RSI confirmation by way of positive divergence (blue line). In addition to this, as noted above, weekly demand is in motion from 1.2365-1.2615. The only drawback to a long from here, aside from the obvious downtrend in play at the moment, is daily flow continuing to extend its position beneath resistance at 1.2697, with room to potentially make a run for Quasimodo support priced in at 1.2480.
Areas of consideration:
For traders who wait for the high of a hammer pattern to be engulfed before pulling the trigger, a position has yet to be initiated. Those who entered on the close of the candle, however, with stop-loss orders plotted beneath the low of the formation (1.2580), are currently experiencing mild drawdown.
In the event the H4 candles turn higher from 1.26, 1.27 offers a logical take-profit target, given its close connection with daily resistance at 1.2697.
Today’s data points: US Core PCE Price Index m/m; US Personal Spending m/m; Chicago PMI; US Revised UoM Consumer Sentiment; FOMC Member Williams Speaks.
Largely emulating EUR/USD movement, the GBP/USD engulfed a H4 support area at 1.2606-1.2646 and confronted 1.26 as price headed into Thursday’s close.
In Thursday’s morning brief, the piece highlighted the following (potential) scenario:
Although some traders are likely looking to buy within the H4 support area at 1.2606-1.2646, given it has a connection with the top edge of weekly demand at 1.2365-1.2615, a fakeout through this area to the nearby 1.26 handle remains a possibility. This is likely due to diminished buying power from 1.2606-1.2646 from last week’s attempt at an advance (23rd) and the collection of stop-loss orders residing beneath it.
For that reason, conservative traders may wish to adopt a patient approach and wait and see if the candles are drawn to 1.26 before taking action. An ideal scenario would be for H4 price to print a hammer formation (or any notable bullish candlestick pattern) off 1.26, thus confirming buyer intent and simultaneously providing traders a structure to base entry and risk levels from.
With the above in mind, the market printed a half-hearted H4 hammer formation upon testing 1.26 yesterday and boasted RSI confirmation by way of positive divergence (blue line). In addition to this, as noted above, weekly demand is in motion from 1.2365-1.2615. The only drawback to a long from here, aside from the obvious downtrend in play at the moment, is daily flow continuing to extend its position beneath resistance at 1.2697, with room to potentially make a run for Quasimodo support priced in at 1.2480.
Areas of consideration:
For traders who wait for the high of a hammer pattern to be engulfed before pulling the trigger, a position has yet to be initiated. Those who entered on the close of the candle, however, with stop-loss orders plotted beneath the low of the formation (1.2580), are currently experiencing mild drawdown.
In the event the H4 candles turn higher from 1.26, 1.27 offers a logical take-profit target, given its close connection with daily resistance at 1.2697.
Today’s data points: US Core PCE Price Index m/m; US Personal Spending m/m; Chicago PMI; US Revised UoM Consumer Sentiment; FOMC Member Williams Speaks.
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