So, if price cuts through 124.53 today, we should look to buy the retest, right? According to the 4hr timeframe structure, this would be a valid trade since there is space seen for price to move between 124.53 and 125.00. However, when taking into consideration that yet another weekly pin-bar candle formed twenty or so pips below the weekly swap (resistance) level at 125.44 last week, we remain hesitant. On top of that, let’s not forget that price is currently sandwiched between a daily at 125.69-124.62, and a daily at 123.51-124.01.
On that account, what if price sells off today? In the event that this does occur and price takes out both 124.00 and 123.81, we may then see prices decline all the way down to 4hr demand coming in at 123.00-123.23. Here’s why…
1. Space for price to move lower between 123.81 and the aforementioned 4hr .
2. As just mentioned, selling tails printed just below the weekly swap (resistance) level at 125.44. In addition to this, there is also space for price to move lower down to the weekly swap (demand) area at 122.01-121.40.
3. The 4hr demand consumption tails painted (pink circles) at 123.51/123.32 suggests that below 124.00, the path south is clear of major bids until the aforementioned 4hr demand area.
So, to sum up, if price breaks above 124.53, be very careful in trading the break since this could end up being a fakeout. Supposing that both 124.00/123.81 is consumed, we’d then likely look to enter short on any confirmed retest of this area, targeting 4hr demand at 123.00-123.23.
Levels to watch/ live orders:
• Buys: Flat (Stop loss: N/A).
• Sells: Watch for 124.00/123.81 to be consumed and then look to enter on a retest at this area (confirmation required).