Daily Timeframe: The reason for the selling pressure likely comes down to a daily supply area seen at 1.59438-1.58338. For higher prices to be seen on the pound, this area would need to be consumed. If the buyers can hold out above 1.57166 on this timeframe, this could be a signal that buying strength is entering the market.
4hr Timeframe: A nice reaction was seen from the 4hr decision-point supply area at 1.58389-1.58103 (located just below the aforementioned daily supply area). We were clearly wrong not to be looking for shorts there!
As we can all see price is presently trading around a 4hr resistance swap area at 1.57208-1.56927, which surrounds the aforementioned weekly resistance swap level. We will be watching the lower timeframes around the 1.57263 area for some sort of buying confirmation that strength is entering the market. If this area fails, be prepared for acceleration to the downside towards at least the 4hr coming in at 1.55917-1.56299, where buying could potentially be seen again (tentative buy orders are seen within the at 1.56141). The reason why prices could drop this far is because we believe most of the demand to the left has already been consumed – check out the pink , and the demand consumption tails that form it at 1.56781/1.56475/1.56274.
• Buy orders: 1.57263 (Predicative stop-loss orders seen at: 1.56876) 1.56141 (Predicative stop-loss orders seen at: 1.55634).
• Sell orders: N/A (Predicative stop-loss orders seen at: N/A).
We will try to explain this the best I can, and, this is only our opinion, so please do take it as such :) We see this as pro money activity, when pro money were buying into the market around the pink trendline, notice how each time price made a high, it declined to a mini pocket of demand to presumably collect unfilled buy orders to continue rallying higher. However, what this also does at the same time is clear the path south for the sellers (pro money already consumed the buy orders). Now say if we break below 1.57208-1.56927, this in our view clears out the last remaining FRESH buy orders, and once that happens price will likely drop since there is very little buying opposition left in the market.
Did that help at all, if not I will try to simplify it