Down on the , support at 0.7178 (now acting resistance) was aggressively taken out on Friday after being respected for the best part of last week, quickly erasing any gains the market had accrued. The next downside target to pay attention to (as per this timeframe) is the weekly support hurdle we just discussed above.
A quick look at Friday’s action on the H4 chart reveals that the at 0.7242-0.7249, along with a strong dollar, did a good job of suppressing the bulls resulting in price closing below mid-level support 0.7150 by the week’s end. As a result of this, the runway south appears to be clear for prices to challenge support at 0.7081.
Whilst shorting on the retest of 0.7150 is certainly something we’ll be watching for today, buying from 0.7081 is not a level we’d stamp high-probability for a reversal even though it converges with the 61.8% Fibonacci level at 0.7082. The more attractive level, in our opinion, sits below at 0.7037 – a Quasimodo support, which ties in beautifully with the weekly at 0.7035 and the 78.6% Fibonacci level at 0.7033.
So, to sum up, we see potential shorting opportunities on the retest of 0.7150, targeting 0.7081 and 0.7037. Also, upon reaching 0.7037, longs could be possible from this region, targeting 0.7081 first and foremost. Just to be clear here, each level would require confirmation from the lower timeframes before we’d consider trading, since a fakeout is very likely going to be seen before opposition steps in.
Levels to watch/live orders:
• Buys: 0.7037 Tentative – confirmation required (Stop loss: dependent on where one confirms this level).
• Sells: 0.7150 Tentative – confirmation required (Stop loss: dependent on where one confirms this level).