ICmarkets
Short

Strong H4 resistance area now within touching distance!

FX:GBPUSD   British Pound/U.S. Dollar
136 0 5
Diving straight into the (technical) action this morning, we can see that price finally conquered the 1.25 handle by yesterday’s close, which had capped downside since mid-Nov. With that being said, the team’s focus is now on the H4 resistance area planted just above at 1.2525-1.2557. The area boasts a H4 61.8% Fib resistance at 1.2531, a H4 mid-way resistance at 1.2550, TWO H4 AB=CD bearish completion points at 1.2553/1.2555 and the top edge of the H4 zone represents a daily Quasimodo resistance at 1.2557. Now, as we mentioned in previous reports, in view of the last point, this does mean there’s a chance that price could fake through our H4 resistance zone , so traders need to be prepared for that.

Our suggestions: While a fakeout above the aforementioned H4 resistance barrier is a possibility, we can still trade from here. Instead of placing a pending sell order and positioning stops just above the zone (not a good idea when a fakeout is likely), waiting for a reasonably sized H4 bearish candle to form within the walls of this region is by far, the safer, more conservative route to take here. This will, of course, not guarantee a winning trade, but will show that sellers have taken an interest here before we pull the trigger!

Data points to consider: UK manufacturing PMI at 9.30am. US Jobless claims at 1.30pm, followed by the US ISM manufacturing release at 3pm GMT             .

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