After price shook hands with the 1.27 handle during the early hours of yesterday’s London segment, a durable wave of offers swamped the market. Stimulated by the US dollar index gathering momentum, as well as the ECB announcing that it will be reducing the quantity of QE, but prolonging the program till Dec 2017, cable wiped out the 1.26 level and touched gloves with the H4 mid-way support at 1.2550 by the day’s end.
With the above points in mind, here is our two pips’ worth on where price action may head today. Despite the recent decline in value, weekly price still, in our opinion, looks poised to extend north to resistance at 1.2938. The story on the daily chart, however, shows that the candles are now seen interacting with a broken Quasimodo support level at 1.2557 that is bolstered by a trendline support taken from the low 1.1904. This – coupled with H4 price currently in the process of forming a D-leg to a H4 AB=CD bull pattern that completes at 1.25, which happens to sit just below December’s opening level at 1.2514 (green circle), potentially advertises the 1.25 neighborhood as an area we may see the pair rotate from today.
Our suggestions: Although we’re confident that at least a bounce will likely be seen from the 1.25 zone, we would be wary of placing pending orders here. The reason is that, quite simply, psychological boundaries are prone to fakeouts! Therefore, waiting for a reasonably sized H4 bull candle to form prior to pulling the trigger is the route we shall take.
Data points to consider: UK Goods trade balance at 9.30am. University of Michigan consumer sentiment survey due for release at 3pm GMT.
Levels to watch/live orders:
• Buys: 1.25 region (reasonably sized H4 bullish close required prior to pulling the trigger, stop loss: ideally beyond the trigger candle).
• Sells: Flat (stop loss: N/A).
With the above points in mind, here is our two pips’ worth on where price action may head today. Despite the recent decline in value, weekly price still, in our opinion, looks poised to extend north to resistance at 1.2938. The story on the daily chart, however, shows that the candles are now seen interacting with a broken Quasimodo support level at 1.2557 that is bolstered by a trendline support taken from the low 1.1904. This – coupled with H4 price currently in the process of forming a D-leg to a H4 AB=CD bull pattern that completes at 1.25, which happens to sit just below December’s opening level at 1.2514 (green circle), potentially advertises the 1.25 neighborhood as an area we may see the pair rotate from today.
Our suggestions: Although we’re confident that at least a bounce will likely be seen from the 1.25 zone, we would be wary of placing pending orders here. The reason is that, quite simply, psychological boundaries are prone to fakeouts! Therefore, waiting for a reasonably sized H4 bull candle to form prior to pulling the trigger is the route we shall take.
Data points to consider: UK Goods trade balance at 9.30am. University of Michigan consumer sentiment survey due for release at 3pm GMT.
Levels to watch/live orders:
• Buys: 1.25 region (reasonably sized H4 bullish close required prior to pulling the trigger, stop loss: ideally beyond the trigger candle).
• Sells: Flat (stop loss: N/A).
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