Looking for a fakeout through 1.20 to sell this market...

2017년 9월 21일

The value of the EUR strengthened on Thursday, consequently erasing 50% of Wednesday’s Fed-induced losses. As the US dollar found refuge beneath USDX weekly resistance at 11854, the single currency conquered both the 1.19 handle and September’s opening level at 1.1913, allowing H4 price to shake hands with the mid-level resistance marked at 1.1950.

Aside from dollar shorts, we also believe this recent upsurge may be a product of buyers defending weekly support at 1.1871, alongside the pair trading in-line with the overall trend. With this in mind, and assuming 1.1950 is consumed today, the unit will likely gravitate north to reconnect with the large psychological band 1.20.

For those considering shorts from 1.20, be prepared for the possibility of a fakeout. Directly above sits a H4 Quasimodo resistance at 1.2021, shadowed closely by weekly resistance at 1.2044. Both levels, in our opinion, are ideal candidates to help facilitate a fakeout above 1.20.

Suggestions: Instead of placing sell orders at 1.20, we will be looking for evidence that a fakeout has taken place before pulling the sell trigger. An ideal scenario would be for H4 price to print a bearish selling wick (as drawn on the chart) that pierces through 1.20, taps the noted H4 Quasimodo and closes lower. Should this trade come to fruition, stops are to be placed above the fakeout candle’s wick and the initial take-profit level would be 1.1950.

Data points to consider: EUR Manufacturing figures released between 8-9am; ECB President Draghi speaks at 9am GMT+1.