Weekly closing price: 1.1047
Weekly opening price: 1.1045
Weekly view: From the top, we can see that weekly movement continues to trade mid-range between a long-term weekly coming in at 1.1533-1.1278, and a long-term weekly support line seen at 1.0796. Both areas have stood the test of time, and with that either one could play a significant role during trading this week.
Daily view: The daily at 1.1224-1.1104 did a pretty good job in holding this market lower last week. Since January 2015, this zone has provided the pair strong on numerous occasions. Apart from the referendum low 1.0911, there’s little support seen stopping price from reaching the daily support chalked in at 1.0824 this week.
H4 view: A quick recap of Friday’s trade on the H4 shows that price turned , following a hotter than expected US jobs report. However, the sell-off was a short-lived one with price rotating from just ahead of the 1.10 handle to highs of 1.1120, before ending the week consolidating around the H4 mid-way point 1.1050.
In view of the higher timeframe structures, our team feels that the shared currency will eventually dive lower sometime this week. Prior to this, however, there are two strong-looking barriers of support on the H4 where price is likely to bounce from:
1. The minor H4 Quasimodo support line seen at 1.0984. This line also coincides with a 127.2% extension from the high 1.1186, and sits just above a H4 completion point at 1.0964. Collectively, this zone is high-probability area for a bounce to be seen.
2. The larger H4 Quasimodo support at 1.0940. Not only did the H4 candles bounce from this line during the ‘Brexit’ fallout (indicating strong support), it also fuses with a 161.8% extension (1.0926) from the high 1.1186. If we’re not mistaken, between the 127.2% and 161.8% extensions is in fact the reversal zone for the above said H4 pattern. Be that as it may, at least in this case, we prefer to look at the areas individually.
Our suggestions: Watch both of the aforementioned H4 support barriers this week for potential long positions. We are confident a bounce will be seen from these areas, but would still advise traders to trade cautiously since fakeouts here are still a possibility!