Across the board, the US dollar rallied against the majority of its trading peers on Wednesday amid tax reform talks, consequently pushing the single currency south. After crushing the 1.19 handle, the pair ended the day bottoming around the 1.1873 mark.
With yesterday’s aggressive slide, technical traders are likely watching for September’s opening level at 1.1913/1.19 handle to hold firm as resistance. Should this come to fruition, all eyes will likely then be on August’s opening line at 1.1830, which happens to not only be positioned a few pips above daily demand at 1.1739-1.1823, it also converges with a H4 AB=CD bullish formation (see black arrows). However, for price to sell off and reach 1.1830, weekly support at 1.1871 would need to be weakened.
Suggestions: We feel the best thing to do right now is be patient. It would, in our technical view, be unwise to attempt a sell at 1.1913/1.19 when weekly price is so near to support. Should price push lower and challenge 1.1830, however, then great, we have a high-probability buy zone to trade. If not, we could see the unit extend back up to the mid-level point 1.1950 or quite possibly the large number 1.20.
Data points to consider: US Inflation figures and US Unemployment claims at 1.30pm GMT+1.
Levels to watch/live orders:
• Buys: 1.1830 region (waiting for a H4 bullish candle to form – preferably in the shape of a full, or near full-bodied candle – is advised, stop loss: ideally beyond the candle’s tail). • Sells: Flat (stop loss: N/A).