Looking to short 1.10 - beautiful confluence!

FX:EURUSD   Euro / U.S. Dollar
212 0 4
Weekly gain/loss: + 99 pips
Weekly closing price: 1.0981

Weekly view: Leaving the support at 1.0819 unchallenged, the shared currency bottomed out around the 1.0850 neighborhood last week and closed the session above resistance coming in at 1.0970. Seeing as how the close above this barrier was marginal, we remain unsure as to whether this is a genuine signal to trade higher this week.

Daily view: Despite the weekly candle closing above a resistance, the daily chart depicts a slightly different picture. Given the closing price, supply at 1.1039-1.0998 is now seen within touching distance. Our desk would need to see this zone taken out before we’d consider the close above the aforementioned weekly resistance to be valid, which would likely stimulate further upside toward daily resistance drawn from 1.1135.

H4 view: A quick recap of Friday’s trade on the H4 shows that the bulls aggressively pushed higher, clocking highs of 1.0991 going into the close. According to Bloomberg, the Federal Bureau of Investigation reopened a probe into Hillary Clinton’s use of an unauthorized e-mail server, which, as far as we can see, was the primary reason for the rally north.

Direction for the week: Until the pair can print a decisive close beyond the current daily supply mentioned above at 1.1039-1.0998, higher prices are unlikely.

Direction for today: With the unit closing the week within shouting distance of the key figure 1.10, the bulls may have their work cut out for them if they intend on pushing things higher here. We say this because not only does 1.10 denote the lower edge of the above said daily supply zone , but it also is positioned nearby a H4 alternate AB=CD completion point at 1.1005, a H4 trendline resistance extended from the high 1.1058 and a H4 78.6% Fib resistance level at 1.1012 (green circle).

Our suggestions: In view of the confluence seen around the 1.10 mark, and the uncertainty surrounding the weekly candle’s close (see above), we feel a short from 1.10 is a valid call. To give the trade some room to breathe we would advise placing stops above the current H4 trendline at around the 1.1025ish range. If you prefer, however, you could always wait for price to confirm bearish intent here in the form of a H4 bearish close, but this would likely get you in at a worse price and significantly reduce the risk/reward down to the first take-profit target: the H4 mid-way support 1.0950.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.10 (pending order stop loss: 1.1025).
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