Following Thursday’s NFP induced fakeout below 4hr demand at 1159.6-1165.6, price has been seen ping-ponging between a small 4hr supply area at 1174.9-1172.7 and 4hr support visible at 1164.9.
Now, considering that the 4hr supply zone just mentioned above is located around the lower limits of a daily swap (supply) area at 1170.4-1184.0, and the 4hr support level is backed by weekly demand coming in at 1142.5-1167.3, which currently forms the lower limit of the weekly range (1142.5-1167.3/ 1223.1-1204.5), it is very difficult to judge direction at this stage. As a consequence, the best thing we believe we can do right now is sit back and watch. Granted, one could potentially trade within this 4hr capped area, but we would much prefer to wait for the break to happen since the risk/reward would in fact be much larger.
A push above the current 4hr supply area would almost immediately expose the 4hr swap area at 1180.1-1177.8. We agree that if this was our target, the risk/reward would be terrible. That said, take note of the wick 1178.9 seen marked with a red arrow – this wick has already likely consumed a ton of offers at this area, and considering it was relatively deep, we’d be confident that this zone would eventually break and clear the path north up to the target 4hr supply seen marked with a pink circle at 1188.0-1185.5.
Conversely, should this market turn south and break below 1164.9, we believe that since demand at 1159.6-1165.6 has already likely been consumed by the NFP push lower on Thursday, price will now be free to attack the 4hr Quasimodo support level coming in below at 1149.68 (located within both the weekly demand area just discussed and the daily demand area at 1142.5-1154.5).
In closing, either a breakout north or south would need to see the following before we’re permitted to pull the trigger. First, a retest of the violated area that MUST be seen holding firm, and secondly, supporting lower timeframe confirmation would also need to accompany the retest.
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Now, considering that the 4hr supply zone just mentioned above is located around the lower limits of a daily swap (supply) area at 1170.4-1184.0, and the 4hr support level is backed by weekly demand coming in at 1142.5-1167.3, which currently forms the lower limit of the weekly range (1142.5-1167.3/ 1223.1-1204.5), it is very difficult to judge direction at this stage. As a consequence, the best thing we believe we can do right now is sit back and watch. Granted, one could potentially trade within this 4hr capped area, but we would much prefer to wait for the break to happen since the risk/reward would in fact be much larger.
A push above the current 4hr supply area would almost immediately expose the 4hr swap area at 1180.1-1177.8. We agree that if this was our target, the risk/reward would be terrible. That said, take note of the wick 1178.9 seen marked with a red arrow – this wick has already likely consumed a ton of offers at this area, and considering it was relatively deep, we’d be confident that this zone would eventually break and clear the path north up to the target 4hr supply seen marked with a pink circle at 1188.0-1185.5.
Conversely, should this market turn south and break below 1164.9, we believe that since demand at 1159.6-1165.6 has already likely been consumed by the NFP push lower on Thursday, price will now be free to attack the 4hr Quasimodo support level coming in below at 1149.68 (located within both the weekly demand area just discussed and the daily demand area at 1142.5-1154.5).
In closing, either a breakout north or south would need to see the following before we’re permitted to pull the trigger. First, a retest of the violated area that MUST be seen holding firm, and secondly, supporting lower timeframe confirmation would also need to accompany the retest.
Guys if you found this analysis to be useful, please do give it a thumbs up. Also criticism is more than welcomed here!
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