Weekly closing price: 1.2185
Weekly view: Although the pair ranged around 200 pips last week, there was little development seen on the weekly chart which resulted in the market printing an indecision candle. While there’s a strong possibility that the pound may head back down to support at 1.1904, let’s keep in mind that on the monthly chart price is seen trading within a rather large demand base between 1.0438-1.3000:
Daily view: From this viewpoint, however, the daily candles have been busy chiseling out a consolidation zone between 1.2118-1.2292 since the 11/10. Below this range, the next available support is the 1.1904 level. Meanwhile, to the upside, the next barrier of interest comes in at 1.2789-1.2928: a that sits directly below a weekly resistance at 1.2942.
H4 view: As was highlighted as a possibility in Friday’s report, price caught a bid from around the 1.2118 region (the lower edge of the daily consolidation) instead of touching base with the 1.21 handle, consequently forcing the unit to end the week shaking hands with the 1.22 band.
Direction for the week: In light of price being caught within a daily range, and weekly action not seen trading at any form of structure, direction is somewhat limited this week. Price action, of course, may take off north from the lower edge of the daily range, but this is a rough finger-in-the-wind assessment.
Direction for today: H4 upside is relatively limited, in our opinion. Not only is there the 1.22 level to contend with, but there’s a nearby minor resistance lurking just above that at 1.2237, followed by a coming in at 1.2328-1.2285. This leaves the downside open to the 1.21 region.
Our suggestions: This is not a particularly attractive market to trade right now. To become buyers, we would like to see the aforementioned H4 supply taken out and by extension, the top edge of the daily range (1.2292), thus, opening the path north up to H4 resistance at 1.2467. To become sellers, however, a close below the 1.21 neighborhood would be ideal, since this takes out the lower edge of the daily consolidation (1.2118) and opens up downside to the key figure 1.20. Nevertheless, do keep in mind that by shorting here, you’re effectively selling into monthly demand (see above).