With weekly price recently finding a floor of support around the 110.30 mark, we see two possible scenarios on the weekly timeframe at the moment:
• To the downside, a weekly AB=CD correction (see black arrows) that terminates within a weekly support area marked at 105.19-107.54 (stretches all the way back to early 2014) may form in the coming weeks.
• To the upside, nonetheless, we also have a potential weekly AB=CD correction (see pink arrows) that completes within supply pegged at 115.50-113.85 which capped upside beautifully in early May.
Since Tuesday last week, the daily candles have been clinging to the underside of a daily resistance area penciled in at 111.35-112.37. This zone has been active since late January, so it is certainly not a base one should ignore. Despite this, the bulls went on the offensive during Monday’s segment, and have pushed price higher into the said daily zone.
A quick recap of Monday’s action on the H4 timeframe shows price recently advanced and broke above the bullish pennant formation (110.64/111.78). As you can see, the move brought the candles up to within striking distance of the 112 handle, which also merges with a left shoulder i.e. a H4 Quasimodo pattern at 112.05 (see the pink arrow). Also of particular interest is that 112 is sited within the upper edge of the aforementioned daily resistance area, and also merges closely with a potential H4 AB=CD (black arrows) 127.2% ext. at 112.09 taken from the low 110.64.
Our suggestions: 112 is an ideal zone to short from, in our opinion. Given that our desk is conservative, however, stops will be positioned beyond the current daily resistance area at 112.39. This will give the trade room to breathe should it come to fruition, and give price the best chance of correcting back down to at least 111.41: April’s opening level (initial take-profit target).
Data points to consider: US consumer confidence report at 3pm, FOMC member Harker speaks at 4.15pm, Fed Chair Janet Yellen speaks at 6pm, FOMC member Kashkari speaks at 10.30pm GMT+1.
• To the downside, a weekly AB=CD correction (see black arrows) that terminates within a weekly support area marked at 105.19-107.54 (stretches all the way back to early 2014) may form in the coming weeks.
• To the upside, nonetheless, we also have a potential weekly AB=CD correction (see pink arrows) that completes within supply pegged at 115.50-113.85 which capped upside beautifully in early May.
Since Tuesday last week, the daily candles have been clinging to the underside of a daily resistance area penciled in at 111.35-112.37. This zone has been active since late January, so it is certainly not a base one should ignore. Despite this, the bulls went on the offensive during Monday’s segment, and have pushed price higher into the said daily zone.
A quick recap of Monday’s action on the H4 timeframe shows price recently advanced and broke above the bullish pennant formation (110.64/111.78). As you can see, the move brought the candles up to within striking distance of the 112 handle, which also merges with a left shoulder i.e. a H4 Quasimodo pattern at 112.05 (see the pink arrow). Also of particular interest is that 112 is sited within the upper edge of the aforementioned daily resistance area, and also merges closely with a potential H4 AB=CD (black arrows) 127.2% ext. at 112.09 taken from the low 110.64.
Our suggestions: 112 is an ideal zone to short from, in our opinion. Given that our desk is conservative, however, stops will be positioned beyond the current daily resistance area at 112.39. This will give the trade room to breathe should it come to fruition, and give price the best chance of correcting back down to at least 111.41: April’s opening level (initial take-profit target).
Data points to consider: US consumer confidence report at 3pm, FOMC member Harker speaks at 4.15pm, Fed Chair Janet Yellen speaks at 6pm, FOMC member Kashkari speaks at 10.30pm GMT+1.
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