As we move down into the , it’s clear that the two buying tails on the weekly chart have chalked up a relatively compact range fixed just below the weekly at 112.56/113.96. A violation of the lower limits of this consolidation, as far as we can see, opens the doors for a potential move down to the 110.96 region (the Feb 11th low).
Friday’s action on the H4 chart saw price extend to highs of 113.91 following Thursday’s aggressive rebound from the upper limits of demand coming in at 112.15-112.60. Right now, the only interesting area that jumps out to us is seen between 114.20 – a Quasimodo resistance, and the 114.00 figure. Reason being is in between here sits the weekly at 114.12 and a converging extended from the high 114.87. This is certainly an area we are interested in shorting this week, with the mid-level number 113.50 in mind as a first target. The only grumble with this trade is the buying tails which formed on the weekly chart! To that end, the most logical path we see here is to wait for price to connect with our pre-determined H4 sell zone and only enter alongside a lower timeframe sell setup. We must also point out that even with the added confluence of lower timeframe confirmation here, stops will be placed above the mid-level barrier 114.50 to give the trade room to breathe.
Levels to watch/live orders:
• Buys: Flat (Stop loss: N/A).
• Sells: 114.20/114.00 region Tentative – confirmation required (Stop loss: dependent on where one confirms this area, but best kept above 114.50).