Daily Timeframe: The shows that the selling pressure around the 1.14655 high was clearly too strong for the buyers to overcome, and as a result saw a full-bodied candle printed yesterday. We see very little that could stop prices from declining here down to at least a 4hr demand area coming in at 1.11896-1.12416 (part of a stacked demand formation – the lower demand is seen at 1.11211-1.11813).
4hr Timeframe: The 4hr timeframe shows that the market opened at 1.14267, and then saw immediate buying that forced prices to spike above a 4hr supply area coming in at 1.14474-1.14290. In our opinion this wick stopped out a ton of sellers attempting to fade the area and also trapped breakout buyers in the process, giving well-funded traders plenty of buy orders to sell into, and sell they did, price dropped like a rock! Anyone who bought here may not have been aware of the humongous weekly supply (levels above) that loomed over the current 4hr supply area like a big-black cloud.
Throughout this selling onslaught, the 1.14 level, and a very important 4hr decision-point demand area at 1.13243-1.13413 was consumed. This move likely confirms that the path south is clear down to at least 1.13. However, we are not expecting this level to put up much of a fight, and as such a push lower will likely attract further selling down to 1.12382, an area which has seen much interest from buyers in the past (located just above the daily demand area mentioned at 1.11896-1.12416). Assuming that the above does indeed come to light, we will be looking to trade this the following way:
1. We’ll be watching for any retest opportunities to short just below the 1.13 level at 1.12973, and will be targeting 1.12418.
2. We’ll also be looking to trade any bounce that may form off of 1.12382 around the 1.12418 mark. For anyone considering buying here as well, we would advise waiting for lower-timeframe confirmation seeing as that we would effectively be buying against higher-timeframe sellers (weekly supply) at that point.
• Buy orders: 1.12418 (Predicative stop-loss orders seen at: 1.12240).
• Sell orders: 1.12973 (Predicative stop-loss orders seen at: Dependent on where one confirms the level).