Interesting P.A playing out on the EUR/USD...
As anticipated, H4 action failed to sustain gains above the mid-level support at 1.1250 yesterday, consequently bringing the unit back down to the 1.12 handle by the closing bell. Technically speaking, we would not be surprised to see the pair continue lower. Our reasoning lies within the higher-timeframe structure. Not only do we have a major weekly supply in play at 1.1533-1.1278, but we also see that there’s a daily supply in motion that’s glued to the underside of this weekly zone at 1.1327-1.1253. The closest higher-timeframe support target can be seen on the daily timeframe at 1.1142.
Our suggestions: Selling beyond 1.12 is an option today, but do take into account that this would only leave one 50 pips of room to play with down to the H4 mid-level support 1.1150, which is where we would look to take full profit given the confluence surrounding this barrier. To take advantage of this move, we’d recommend waiting for a H4 close beyond 1.12 that’s followed up with a retest and a lower-timeframe confirming signal. This could be either an engulf of demand followed by a retest of this area as supply, a trendline break/retest or simply a well-defined collection of selling wicks off of 1.12. We typically search for lower-timeframe confirmation between the M15 and H1 timeframes, since most of our higher-timeframe areas begin with the H4. Stops are usually placed 1-3 pips beyond confirming structures.
Not only is 1.1150 a take-profit zone, it’s also a nice area to look for buying opportunities. The base offers the following structures:
• A H4 trendline support taken from the high 1.1268.
• A H4 trendline support etched from the low 1.1075.
• A H4 61.8% Fib support at 1.1155 drawn from the low 1.1074.
• A H4 78.6% retracement level pegged at 1.1147 penciled in from the low 1.1109.
• A daily support level seen at 1.1142.
Seeing as how this zone is rather small, we will not be placing pending buy orders here. Instead, we’ve chosen to wait for a reasonably sized H4 bull candle to form, preferably a full-bodied candle. This will help prove buyer interest exists here which IS needed due to where price is trading from on the weekly chart right now.
Data points to consider: No high-impacting news events.
Our suggestions: Selling beyond 1.12 is an option today, but do take into account that this would only leave one 50 pips of room to play with down to the H4 mid-level support 1.1150, which is where we would look to take full profit given the confluence surrounding this barrier. To take advantage of this move, we’d recommend waiting for a H4 close beyond 1.12 that’s followed up with a retest and a lower-timeframe confirming signal. This could be either an engulf of demand followed by a retest of this area as supply, a trendline break/retest or simply a well-defined collection of selling wicks off of 1.12. We typically search for lower-timeframe confirmation between the M15 and H1 timeframes, since most of our higher-timeframe areas begin with the H4. Stops are usually placed 1-3 pips beyond confirming structures.
Not only is 1.1150 a take-profit zone, it’s also a nice area to look for buying opportunities. The base offers the following structures:
• A H4 trendline support taken from the high 1.1268.
• A H4 trendline support etched from the low 1.1075.
• A H4 61.8% Fib support at 1.1155 drawn from the low 1.1074.
• A H4 78.6% retracement level pegged at 1.1147 penciled in from the low 1.1109.
• A daily support level seen at 1.1142.
Seeing as how this zone is rather small, we will not be placing pending buy orders here. Instead, we’ve chosen to wait for a reasonably sized H4 bull candle to form, preferably a full-bodied candle. This will help prove buyer interest exists here which IS needed due to where price is trading from on the weekly chart right now.
Data points to consider: No high-impacting news events.
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