Weekly gain/loss: - 29 pips
Weekly closing price: 1.1178
Over the course of last week’s trading, we saw the single currency come up to within striking distance of a formidable weekly supply area coming in at 1.1533-1.1278. The zone has managed to cap upside since May 2015, so it’s not a base one should overlook. What’s also interesting is the recently formed weekly selling wick, also known as a bearish pin bar. In the event that the bears continue to push lower this week, the next downside target can be seen at 1.0873: the 2016 yearly opening line.
Glued to the underside of the said weekly supply area is a daily supply zone visible at 1.1327-1.1253. This zone, as you can see, held firm last week and has consequently placed the daily candles just ahead of a support level drawn from 1.1142. Therefore, it may be prudent to wait for price to engulf this daily line before contemplating selling the bearish weekly pin bar.
A quick recap of Friday’s movement on the H4 timeframe shows that the 1.12 handle was taken out. This move, influenced by upbeat US Prelim GDP figures, ended with price challenging the lower limits of demand pegged at 1.1161-1.1189. Although this demand has effectively held ground, the main interest remains around the H4 mid-level support seen below at 1.1150. What makes this level attractive is the converging H4 AB=CD (see black arrows) 127.2% Fib ext. at 1.1140 taken from the high 1.1268, and the daily support mentioned above at 1.1142. Together, this forms a small, yet high-probability, buy zone (green rectangle).
Our suggestions: While we do expect to see a bounce from the 1.1142/1.1150 neighborhood, there are two cautionary points to consider here. Firstly, let’s remember that weekly sellers produced a bearish selling wick just beneath the weekly supply zone last week, which could imply further selling in this market. Secondly, the current H4 demand could potentially act as a nearby resistance once consumed.
Should you consider 1.1142/1.1150 to be a valid buy zone, we would strongly recommend adopting aggressive trade management from here, since getting caught on the wrong side of weekly flow would not be a pleasant experience.
Data points to consider: ECB President Draghi speaks at 2pm GMT+1. US banks are closed in observance of Memorial Day.
Levels to watch/live orders:
• Buys: 1.1142/1.1150 (potential buy zone – strict trade management advised - stop loss: a few pips below 1.1142).
• Sells: Flat (stop loss: N/A).
Weekly closing price: 1.1178
Over the course of last week’s trading, we saw the single currency come up to within striking distance of a formidable weekly supply area coming in at 1.1533-1.1278. The zone has managed to cap upside since May 2015, so it’s not a base one should overlook. What’s also interesting is the recently formed weekly selling wick, also known as a bearish pin bar. In the event that the bears continue to push lower this week, the next downside target can be seen at 1.0873: the 2016 yearly opening line.
Glued to the underside of the said weekly supply area is a daily supply zone visible at 1.1327-1.1253. This zone, as you can see, held firm last week and has consequently placed the daily candles just ahead of a support level drawn from 1.1142. Therefore, it may be prudent to wait for price to engulf this daily line before contemplating selling the bearish weekly pin bar.
A quick recap of Friday’s movement on the H4 timeframe shows that the 1.12 handle was taken out. This move, influenced by upbeat US Prelim GDP figures, ended with price challenging the lower limits of demand pegged at 1.1161-1.1189. Although this demand has effectively held ground, the main interest remains around the H4 mid-level support seen below at 1.1150. What makes this level attractive is the converging H4 AB=CD (see black arrows) 127.2% Fib ext. at 1.1140 taken from the high 1.1268, and the daily support mentioned above at 1.1142. Together, this forms a small, yet high-probability, buy zone (green rectangle).
Our suggestions: While we do expect to see a bounce from the 1.1142/1.1150 neighborhood, there are two cautionary points to consider here. Firstly, let’s remember that weekly sellers produced a bearish selling wick just beneath the weekly supply zone last week, which could imply further selling in this market. Secondly, the current H4 demand could potentially act as a nearby resistance once consumed.
Should you consider 1.1142/1.1150 to be a valid buy zone, we would strongly recommend adopting aggressive trade management from here, since getting caught on the wrong side of weekly flow would not be a pleasant experience.
Data points to consider: ECB President Draghi speaks at 2pm GMT+1. US banks are closed in observance of Memorial Day.
Levels to watch/live orders:
• Buys: 1.1142/1.1150 (potential buy zone – strict trade management advised - stop loss: a few pips below 1.1142).
• Sells: Flat (stop loss: N/A).
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