Shorts on the radar...

2017년 5월 14일

Weekly gain/loss: - 67 pips
Weekly closing price: 1.0931

The previous week’s action saw the single currency dive lower from 1.1016/1.0954 (red zone), which is made up of two weekly 127.2% Fib extensions taken from the lows 1.0340/1.0493.As you can see though, it was not smooth sailing for the bears as the 2016 yearly opening level at 1.0873 elbowed its way into the spotlight, consequently erasing around 50% of the week’s losses.

As can be seen from the daily chart, support at 1.0850 also played a huge role in last week’s bullish recovery! The week ended with the pair printing a near-full-bodied bullish close which could point towards further upside this week back up to the trendline resistance extended from the high 1.1616.

A strong decline in the US dollar sparked by lower-than-expected US Inflation data and Retail sales figures on Friday helped lift H4 price out from within 1.0850/1.0873 (the combined daily support and weekly 2016 yearly opening level). Well done to any of our readers who managed to jump aboard this move as it was a noted zone to look for buying opportunities from! With price seen concluding the week looking as though it wants to grapple with the mid-level resistance at 1.0950, where does one go from here?

Our suggestions: 1.0950 is a reasonably attractive neighborhood for shorts due to the following confluence:

• A H4 trendline resistance taken from the low 1.0820.
• A H4 61.8% Fib resistance pegged at exactly 1.0950.
• A H4 supply base at 1.0996-1.0966.
• The 127.2% weekly Fib extension is seen at 1.0954.

Therefore, there’s a chance we may see a bounce from our small green box at 1.0966/1.0950 this morning. As tempting as it may be to place pending sell orders here, however, we’d strongly advise against this. Our reasoning stems from seeing 1.1000 lurking just above. This large psychological line not only sits within the upper limits of the weekly Fib ext. zone (see above), it also converges closely with the said daily trendline resistance! For that reason, waiting for a reasonably sized H4 bearish rotation candle to form within the noted green zone (preferably a full-bodied candle) is recommended.

So, with the above taken on board, we have two areas to keep an eyeball on this morning:

1. The above noted green area which comprises of attractive confluence.
2. If the 1.0950 region fails to hold, 1.1000 will likely be the next barrier on the hit list!

Data points to consider: No high-impacting news events on the docket today.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.0966/1.0950 (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). 1.1000 (stop loss: 1.1020).