Moving down to the , the EUR was well-bid for the best part of last week from support penciled in at 1.0813. It was only until Friday’s session got into full swing did things begin to turn sour. A strong wave of offers pummeled this pair from supply at 1.0992-1.0951, erasing most of the week’s gains and ending the day by jabbing back down into the above said support.
And finally, a look at the H4 timeframe shows just how relentless Friday’s sell-off was, despite fundamentals printing a weak U.S. GDP report! Both psychological support 1.0900 and the mid-level barrier 1.0850 were taken out, finishing the day off around lows of 1.0809.
For those who read Friday’s report (http://blog.icmarkets.com/friday-29th-january-daily-technical-outlook-and-review/), it was noted that between mid-level resistance 1.0950 and the H4 supply at 1.0992-1.0973 (pink circle) was a good place to sell at. However, in an attempt to get more bang for our buck, we wanted to sell higher at the H4 supply rather than taking what was offered at the time – clearly a silly decision in this case! Well done to any of our readers who managed to short this move!
In light of both the weekly and trading at support (see above) right now, shorting this market today, and quite possibly during the week, is not really something we’d be comfortable with. What has taken our fancy, however, is the collection of H4 structures just below current prices consisting of a psychological support 1.0800, a H4 at 1.0777-1.0790 and the H4 support lurking directly below here at 1.0772. This – coupled with the bedrock of higher timeframe supports in play (see above), marks a high-probability reversal zone. Whether one chooses to enter here with a pending order or wait for further confirmation is totally trader dependent. For us, nonetheless, we’re going to wait for lower timeframe confirmation before buying here. Reason being is that our stop would likely be smaller thus increasing risk/reward. Targets are difficult to predict right now since the approach to this zone is not yet visible.
Levels to watch/live orders:
• Buys: 1.0772/1.0800 Tentative – confirmation required (Stop loss: dependent on where one confirms this area but will likely be beyond the 1.0772 mark).
• Sells: Flat (Stop loss: N/A).