Pound currently trading from our pre-determined buy zone...
Following yesterday’s retest to the underside of the 1.27 handle, the pair underwent a stern downside correction. The move was reinforced by the FOMC raising its Fed funds target rate 25bps to 0.75%. The 1.26 handle, as well as the H4 mid-way support barrier at 1.2550 were both taken out, leaving price free to touch gloves with the top edge of our pre-determined H4 buy zone at 1.2481/1.2514 (green zone) that we highlighted in yesterday’s report.
In spite of the decline in value, we feel that weekly action remains in somewhat of a bullish stance, due to there being room to extend north to check in with resistance drawn from 1.2938. Meanwhile, daily action has penetrated the broken Quasimodo support line at 1.2557 that intersects with a trendline support drawn from the low 1.1904.
Our suggestions: Between December’s opening level at 1.2514 and the H4 61.8% Fib support at 1.2481, we can see that it holds not only a psychological support at 1.25 which converges with a H4 AB=CD bull pattern, there’s also a H4 trendline support extended from the high 1.2673 intersecting with this barrier. Granted, a long from this area does effectively mean that we’re trading in the ‘hope’ that the breach beyond the aforementioned daily broken Quasimodo level is a fakeout and not a continuation move. However, dependent on the time of day, we still believe that this H4 zone holds enough confluence to justify a long position without the need to wait for further confirmation.
Data points to consider: UK retail sales at 9.30am, UK interest rates at 12pm. US CPI report, Philly Fed manufacturing index and Jobless claims all set to hit the wire at 1.30pm GMT.
Levels to watch/live orders:
• Buys: 1.2505 (dependent on the time of day, a buy from this region is valid and requires no further confirmation, stop loss 1.2476).
• Sells: Flat (stop loss: N/A).
In spite of the decline in value, we feel that weekly action remains in somewhat of a bullish stance, due to there being room to extend north to check in with resistance drawn from 1.2938. Meanwhile, daily action has penetrated the broken Quasimodo support line at 1.2557 that intersects with a trendline support drawn from the low 1.1904.
Our suggestions: Between December’s opening level at 1.2514 and the H4 61.8% Fib support at 1.2481, we can see that it holds not only a psychological support at 1.25 which converges with a H4 AB=CD bull pattern, there’s also a H4 trendline support extended from the high 1.2673 intersecting with this barrier. Granted, a long from this area does effectively mean that we’re trading in the ‘hope’ that the breach beyond the aforementioned daily broken Quasimodo level is a fakeout and not a continuation move. However, dependent on the time of day, we still believe that this H4 zone holds enough confluence to justify a long position without the need to wait for further confirmation.
Data points to consider: UK retail sales at 9.30am, UK interest rates at 12pm. US CPI report, Philly Fed manufacturing index and Jobless claims all set to hit the wire at 1.30pm GMT.
Levels to watch/live orders:
• Buys: 1.2505 (dependent on the time of day, a buy from this region is valid and requires no further confirmation, stop loss 1.2476).
• Sells: Flat (stop loss: N/A).
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