Initially, our team was from this area, but given the recent spike below this zone seen around yesterday’s open, and the fact that the printed an indecision candle going into yesterday’s close 122.52, we feel that this market may drive south to connect up with the 122.00 handle today. It would be here that we’d begin looking for buys into this market for the following reasons:
1. A move down to 122.00 would essentially place price at the upper limits of a minor weekly swap area at 122.01-121.40 (see weekly chart).
2. Price would then be located extremely deep within the aforementioned daily swap area.
3. 122.00 is a number that has been heavily respected as resistance on two occasions in the past. The first was seen a little lower than 122.00 at 121.83 on the 07/12/14. This just showed how much supply was at this area at that time! More recently though, we saw price literally react to-the-pip at 122.01 on the 10/03/2015. This sent the market down a very cool 350 pips!
Waiting for lower timeframe confirming price action around the 122.00 number is highly recommended, since fakeouts tend to occur around psychological hurdles more often than not, and there is nothing worse than price stabbing your stop and bolting to your target.
Levels to watch/ live orders:
• Buys: 122.00 (Stop loss: dependent on where one confirms this number).
• Sells: Flat (Stop loss: N/A).