As we mentioned in Tuesday’s report, in view of the weekly candles recently nudging into a along with daily price trading off a support, medium-term direction is somewhat limited. However, do keep a tab on the daily Quasimodo at 1.0198, as this barrier sits comfortably within the aforementioned weekly .
Our suggestions: Given the above factors, here is what our desk has noted so far:
For longs, we would personally avoid the H4 support 1.0076/1.01 handle. Although it boasts a daily support, we believe weekly sellers will likely overpower this area and drag prices down to the yearly opening level. This level – coupled with the daily broken Quasimodo line at 1.0037 (intersects with a support taken from the high 0.9956) points the spotlight on a nearby H4 demand base at 0.9994-1.0019 (holds parity) for longs. Dependent on the time of day, this area sports enough confluence, in our opinion, to permit a trade without the need to wait for confirming price action.
For shorts – while the current H4 supply has done a reasonably good job of holding the market lower, our focus remains above this barrier at 1.02. This psychological boundary converges beautifully with the above noted daily Quasimodo resistance, which itself, as we already know, is positioned within the aforementioned weekly resistance area! Although 1.02 sports attractive confluence, a fakeout is still likely around this fixed level. As such, we would advise waiting for the lower timeframes to confirm seller interest before considering a trade here as there’s nothing worse than having your trade stopped by a few pips only to later see your target hit!
Data points to consider today: US ADP nonfarm employment change at 1.15pm, FOMC member Powell speaks at 4.45pm GMT .
Levels to watch/live orders:
• Buys: 0.9994-1.0019 (dependent on the time of day, a long at market is possible from this zone, stop loss: 0.9988).
• Sells: 1.02 region (waiting for lower timeframe confirming action is preferred, stop loss: dependent on where one confirms the area).