As you can see, price reacted beautifully to our buy zone (formed from both a 61.8% Fibonacci level at 1.0808 and psychological support coming in at 1.0800) during yesterday’s sessions. In the above said report, you may remember we also noted that we would not be placing a pending buy order at this level. Instead, an entry was dependent on the H4 approach and time of day. Well, the approach was nice, and to top it off there was a collection of beautiful buying tails seen on the H1 which allowed us to enter just before the U.S. open at 1.08153 with a stop set at 1.07965. 50% of our position has already been liquidated at mid-level resistance 1.0850 and the stop moved to breakeven.
With the aggressive break above 1.0850 late in yesterday’s trade which potentially opened the gates to further buying up to psychological resistance 1.0900, and daily action showing room to move up to supply at 1.0992-1.0951, this trade has high odds of rallying higher. Ultimately though, we’re eyeing the H4 Quasimodo level mentioned above at 1.0984, where we intend on closing our final long position here and switching to shorts (pending order set at 1.0983). Reasons for looking to short here are as follows (mentioned in previous report):
• A lot of people are probably wondering why we did not select the H4 seen at 1.0946-1.0931 as a sell zone considering it’s positioned just beneath daily supply at 1.0992-1.0951. The reason for why is the spike seen on the 10th Jan at 1.0969 likely took out a huge amount of stops from here, thus potentially weakening this zone.
• The H4 Quasimodo sits nicely within the extremes of the above said daily .
• It also blends beautifully with the 78.6% Fibonacci barrier at 1.0985.
• Large Psychological resistance sits just above at 1.1000.
For those who missed the long entry at daily support yesterday, however, there may be a chance to buy later on today should price retest 1.0850 as support before reaching 1.0900. We would, dependent on the time of day and how the lower timeframe price behaved, consider pyramiding our current position.