Following Sunday’s open 0.7001 the commodity currency saw a steady stream of bids flow into the market, pushing price to highs of 0.7031. For those who read our previous report (http://blog.icmarkets.com/monday-25th-january-weekly-technical-outlook-and-review/), you may recall that we took a short at 0.7034 on Thursday last week and moved our stop to breakeven once partial profits were taken at the large psychological support 0.7000 on Friday. As you can see, price came within two pips of taking us out at breakeven yesterday before collapsing back beneath 0.7000 to lows of 0.6949. With this, it looks as though price is headed in the direction of H4 support painted at 0.6926 – sits twenty or so pips above daily demand at 0.6768-0.6903.
In the event that price reaches here, we’ll liquidate our sell and switch to begin looking for confirmed longs between the above said H4 support and psychological support 0.6900. This, at least in our book, is a high-probability reversal zone since not only does it sit on top of the aforementioned daily demand, it also sits snug within weekly demand at 0.6768-0.6942. Furthermore, there’s additional support seen here from the 61.8% Fibonacci level at 0.6909.
Levels to watch/live orders:
• Buys: 0.6926/0.6900 Tentative – confirmation required (Stop loss: dependent on where one confirms this area).
• Sells: 0.7034 (Stop loss: breakeven).