While the noted H4 area (1.2835/1.2850) is likely to produce a bounce, traders may also want to take into account that there is a weekly support seen nearby at 1.2789, a few pips below the 1.28 handle. To that end, price may want to test this level before any serious move is seen.
Our suggestions: Given how small the H4 buy zone is at 1.2835/1.2850, we would strongly advise waiting for a lower-timeframe confirming signal to form before committing yourself. This could be either an engulf of supply followed by a retest as demand, a break/retest or simply a collection of lower-timeframe tails seen within the H4 zone. 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.
Data points to consider: UK Services PMI at 9.30am. US unemployment claims and trade balance at 1.30pm GMT+1.