Overall, yesterday’s UK inflation figures came in better than expected. Despite this, the pair failed to sustain gains beyond the H4 mid-level resistance at 1.2950 and tumbled to a low of 1.2865, bouncing nicely off of a H4 trendline support taken from the low 1.2804.With the H4 candles currently responding to the underside of May’s opening level at 1.2927, we could be looking at another test of the 1.29 handle today, or even possibly the trendline support again.
The bigger picture shows weekly price to be trading around the underside of a supply base at 1.3120-1.2957, which eventually could force the unit to retest support at 1.2789. Meanwhile, daily flow is seen loitering mid-range between support at 1.2843 and supply penciled in at 1.3058-1.2979.
Our suggestions: Neither a long nor short seems attractive at the moment.
In view of how close the 1.29 handle is and the aforementioned H4 trendline support, this is not really a market we want to be shorting today. In regards to longs from 1.29, we would also steer clear. Pressure from weekly sellers, coupled with May’s opening level lurking above, followed closely by 1.2950, is enough to suggest that buying may not be a good path to take.
Data points to consider: UK employment figures at 9.30am GMT+1.