Zooming in and looking at the daily picture, price ended the week closing five pips above supply at 1.1385-1.1332, (now acting demand) consequently forming an indecision candle with a very slight edge going to the bulls. In light of this, we see very little reason, at least from this timeframe, why the EUR will not rally to shake hands with Quasimodo resistance coming in 1.1460 (located within the aforementioned weekly supply) sometime this week.
Moving across to the H4 chart, we can see that shortly after Friday’s better than expected U.S. employment data, price found support around the broken Quasimodo line at 1.1338, and reversed losses back to psychological resistance 1.1400. For those who read our previous report (see link below) you may recall that we mentioned to keep a tab on the H4 supply at 1.1451-1.1425 for a confirmed short opportunity. As can be seen, price pinned this zone beautifully and plunged south. What is more, there was a collection of M30 selling wicks seen at the base of this area before the sell-off thus confirming this zone as legit. However, we passed on the trade since it was only an hour away from the mighty NFP release! Well done to any of our readers who caught this move!
Given the points made above, here is our two cents’ worth on where this market may head this week… Seeing as how H4 supply at 1.1451-1.1425 was pinned on Friday, our eyes are now drawn to the H4 supply sitting directly above it at 1.1495-1.1467. This area is significant since is sits only seven pips above the daily Quasimodo resistance line at 1.1460, and let’s not forget that it is also housed within a major area of weekly supply at 1.1533-1.1278. Therefore, this is certainly a zone we’d be interested in shorting this week, but we’ll still require lower timeframe confirmation due to the psychological resistance 1.1500 lurking just above (fakeout possible). In trading this H4 supply, we’re looking for a relatively big move due to where it is positioned on the . With that being said though, at this point it’s very difficult to pinpoint a first take-profit target without seeing the H4 approach, so this will be decided further down the line.
Levels to watch/live orders:
• Buys: Flat (Stop loss: N/A).
• Sells: 1.1495-1.1467 Tentative – confirmation required (Stop loss: dependent on where one confirms this area).