Daily view: The shows that a strong close below the daily swap area coming in at 1.1051-1.0918 was seen during yesterday’s session. As far as we can see, this move has paved the way south for further downside to at least the daily demand area visible at 1.0658-1.0736, which, as you can probably see, is not only located within the aforementioned weekly demand area, but it also boasts daily convergence from the low 1.0461.
4hr view: The recent selling on this pair saw price take out the 1.0900 handle and slam dunk itself into 4hr demand positioned just below it at 1.0859-1.0883. As you can see, the buyers have attempted to trade higher from here on two occasions, but each time price was forced to close back below 1.0900, suggesting weakness.
Our team has come to a general consensus that buying from this current 4hr demand area is not really high probability, unless a convincing close above 1.0900 is seen, which at this point in time, seems unlikely.
In the case that this 4hr is taken out later on today, this could set the stage for a continuation move south down towards the round number 1.0800, or even the 4hr demand area seen just below it at 1.0732-1.0781 (located just above the aforementioned daily demand area) . However, for us to be given the green light to short following a close below the 4hr demand area, we would need to see not only a very strong retest of this area as supply, but also supporting lower timeframe strength i.e. a , an engulf of demand etc… Should all of the above take place, 1.0800 would be where we’d take full profits, since this number also marks the completion point for an pattern from the high 1.1465, thus making it a perfect area to cover any shorts you may have and begin looking for longs into the market.