The response from the aforementioned H4 resistance should not really come as much of a surprise. Not only was price trading within touching distance of a daily registered at 106.81-106.22, but price is now seen crossing swords with a weekly supply at 105.19-107.54. This begs the question whether the sellers can continue driving this market lower today and possibly rip through bids at the 105 handle?
Our suggestions: In light of the above points, we feel that the major will take out bids around 105 today, and potentially continue lower down to 104. To trade this move, however, we’d need to see two things happen. Firstly, a retest of 105 as resistance, and secondly a lower timeframe sell signal following the retest. This could be either an engulf of demand followed by a subsequent retest as supply, a break/retest or simply a collection of well-defined selling wicks around 105. Stops are usually placed 5-10 pips above the confirming structures.