Still watching 0.75 for longs!
Despite an earnest attempt to reach the 0.76 boundary after testing local H4 support at 0.7555, the bulls were unable to muster enough strength to sustain recent gains. Thursday’s action, therefore, concluded with the H4 candles closing just ahead of the noted local H4 support, marginally down on the day. As mentioned in yesterday’s report, we believe this support to be fragile since it has effectively been breached (see black arrows), which is, in our view, enough to have wiped out the majority of buyers here (stop-loss orders placed below) and clear the path south down to the H4 Quasimodo support planted at 0.7536.
On the weekly timeframe, we can see that weekly price looks poised to attack a nice-looking weekly AB=CD (see black arrows) 161.8% Fib ext. point at 0.7496. Not only does this line merge with a weekly 50.0% value at 0.7475 taken from the high 0.8125, it’s also bolstered by a weekly channel support extended from the low 0.6827. Down on the daily picture, the market has been busy painting red candles since the week’s opening. The next downside target on the daily scale can be seen at 0.7532: 21/11/17 low, followed closely by daily support fixed at 0.7505.
Suggestions: Although the H4 Quasimodo support at 0.7536 may bounce price, it is not a level we’d trade. This is largely due to the 0.75 handle (not seen on the chart) boasting attractive confluence and, therefore, likely to be the better buy zone. 0.75 boasts not only the aforementioned weekly structures; it also merges with a daily support mentioned above at 0.7505.
On account of the above, we will, dependent on the time of day (news), be looking to buy 0.75, with stops positioned 50-70 pips below. This should provide the trade enough breathing room, as this could potentially be a long-term trade with great risk/reward.
Data points to consider: Caixin manufacturing PMI at 1.45am; FOMC member Kaplan speaks at 2.30pm; ISM manufacturing PMI at 3pm; FOMC member Harker speaks at 3.15pm GMT.
On the weekly timeframe, we can see that weekly price looks poised to attack a nice-looking weekly AB=CD (see black arrows) 161.8% Fib ext. point at 0.7496. Not only does this line merge with a weekly 50.0% value at 0.7475 taken from the high 0.8125, it’s also bolstered by a weekly channel support extended from the low 0.6827. Down on the daily picture, the market has been busy painting red candles since the week’s opening. The next downside target on the daily scale can be seen at 0.7532: 21/11/17 low, followed closely by daily support fixed at 0.7505.
Suggestions: Although the H4 Quasimodo support at 0.7536 may bounce price, it is not a level we’d trade. This is largely due to the 0.75 handle (not seen on the chart) boasting attractive confluence and, therefore, likely to be the better buy zone. 0.75 boasts not only the aforementioned weekly structures; it also merges with a daily support mentioned above at 0.7505.
On account of the above, we will, dependent on the time of day (news), be looking to buy 0.75, with stops positioned 50-70 pips below. This should provide the trade enough breathing room, as this could potentially be a long-term trade with great risk/reward.
Data points to consider: Caixin manufacturing PMI at 1.45am; FOMC member Kaplan speaks at 2.30pm; ISM manufacturing PMI at 3pm; FOMC member Harker speaks at 3.15pm GMT.
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