Weekly closing price: 1.1195
Despite the single currency ranging over 160 pips last week, there was absolutely no change registered at the close. What we did see form, however, was a clear-cut indecision weekly candle that tested the lower boundary of a major weekly supply coming in at 1.1533-1.1278.
Since the 22nd May, the daily candles have been consolidating between supply logged at 1.1327-1.1253 (glued to the underside of the said weekly ) and a penciled in at 1.1142. A decisive close below this support could potentially place the support etched from the high 1.1616 in the firing range, followed closely by support at 1.0850. To the upside, a break through the current supply may see price attempt to attack 1.1382: a daily Quasimodo .
For those who read Friday’s report you may recall that we showed interest in buying from the 1.1150 neighborhood should a reasonably sized H4 bull candle (preferably a full-bodied candle) take shape. This was due to the following converging structures (a H4 support taken from the low 1.1075 was initially included but is now considered invalid on the H4 chart):
• A H4 61.8% Fib support at 1.1159 drawn from the low 1.1074.
• A H4 level pegged at 1.1149 penciled in from the low 1.1109.
• A daily seen at 1.1142.
As you can see, H4 action rallied from the green buy zone on Friday, which saw price wrap up the week shaking hands with the 1.12 handle (intersects nicely with a H4 resistance extended from the low 1.1109 and a H4 38.2% Fib resistance at 1.1193 taken from the high 1.1295).
Our suggestions: In short, here’s what we’re looking at right now.
• Weekly price indicates shorts may take the lead this week.
• Daily price on the other hand, recently recovered from support at 1.1142 and could pull the major back up to the aforementioned supply.
• H4 price is seen trading around a particularly confluent sell zone.
Given the above points, we feel the sellers may have the upper hand here at the moment. However, before we look to short from 1.12, our team would require additional H4 price confirmation in the form of a candle (preferably a full-bodied candle). This will by no means guarantee that the sellers will continue to push lower, but what it will do is show seller intent around a high-probability sell zone that boasts weekly confluence.
Data points to consider: German Buba President Weidmann speaks at 4pm. FOMC Member Dudley speaks at 1pm GMT+1.
Levels to watch/live orders:
• Buys: Flat (stop loss: N/A).
• Sells: 1.12 region (waiting for a reasonably sized H4 bear candle – preferably a full-bodied candle – to form before pulling the trigger is advised, stop loss: ideally beyond the candle’s wick).