Over on the bigger picture, we can see that weekly price is beginning to show signs of weakness within weekly supply seen at 0.7897-0.7813. In spite of this, a break beyond the 2018 yearly opening level at 0.7801 will need to be seen before a bias is confirmed.
A closer look at price action on the reveals that the unit formed a reasonably strong-looking daily candle after connecting with a daily seen at 0.7897-0.7870 on Monday, which was extended on Tuesday. Not only is this zone positioned within the upper limits of the weekly supply area highlighted above, downside is reasonably clear on the daily scale until the daily seen at 0.7732-0.7749.
In view of the unit’s close proximity to the 0.78 handle and the 2018 yearly opening level mentioned above at 0.7801, selling may not be the path to take just yet. Once, or indeed if, a clean H4 break of 0.78 takes place, then, as far as we can see, downside is free to challenge the aforementioned daily .
Waiting for a break/retest of 0.78, targeting 0.7750 could be something to consider. The break could take place following Chinese figures due at 1.30am GMT , so remain vigilant.
Data points to consider: Chinese data y/y at 1.30am; US import prices m/m at 1.30pm GMT .