Technically, this sell-off was expected owing to the weekly candle trading within a weekly supply area seen at 1.1533-1.1278, whilst daily action was, at the time, also flirting with the inside of a daily coming in at 1.1446-1.1369. Additionally, we can see that yesterday’s selling formed a nice-looking daily candle, suggesting that the shared currency may be looking to connect with daily demand at 1.1215-1.1264 (the next downside target seen on the higher timeframes).
Our suggestions: Watch for this market to close below 1.13, since the path beyond this number looks clear down to H4 support at 1.1233, making it an ideal take-profit line (conveniently sits within the aforementioned daily demand area). Following a satisfactory close lower, our team will begin looking for price to retest 1.13 as resistance and print a lower timeframe sell signal. This could be in the form of an engulf of demand followed by a retest, a break/retest or simply a collection of selling wicks around resistance. Ultimately, stops are usually placed 5-10 pips beyond confirming structures to give the trade room to breathe.
Levels to watch/live orders:
• Buys: Flat (Stop loss: N/A).
• Sells: Watch for price to consume 1.13 and look to trade any retest seen thereafter (lower timeframe confirmation required).