H4 resistance at 0.7632 holds attractive confluence for a short.

2017년 11월 22일

Following the release of the FOMC minutes on Wednesday, the commodity currency drove through offers at the 0.76 handle and tapped a session high of 0.7623. Traders may have also noticed that the recent move north completed a H4 AB=CD bearish formation at 0.7620 (see black arrows). While the H4 candles are currently displaying bearish intent, we have to be prepared for the possibility that the unit may want to cross swords with the H4 resistance seen above at 0.7632. This is due to the level converging with the AB=CD 161.8% ext. point at 0.7633 and with a H4 trendline resistance taken from the high 0.8103.

Looking across to the daily timeframe, there is little immediate structure in view at the moment. The next point of interest is a supply coming in at 0.7695-0.7657. Up on the weekly timeframe, price is seen turning north ahead of a merging channel support extended from the low 0.6827, and a nice-looking AB=CD (see black arrows) 161.8% Fib ext. point at 0.7496 that also aligns with a 50.0% value at 0.7475 taken from the high 0.8125.

Suggestions: Selling from the aforementioned H4 resistance is high probability according to the H4 timeframe, but a risky move according to daily structure. This is because the lower edge of the aforementioned daily supply sits only 25 or so pips above the H4 resistance! Therefore, if you intend on selling 0.7632, we would strongly advised waiting for at least a H4 bearish candle to form, preferably in the shape of a full or near-full-bodied candle. This will help avoid a fakeout should it occur.

Data points to consider: No high-impacting events on the docket today; US banks will be closed in observance of Thanksgiving Day.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 0.7632 region (waiting for a reasonably sized H4 bearish candle to form – preferably a full or near-full-bodied candle – is advised, stop loss: ideally beyond the candle’s wick).