Well done to those who bought 1.24/1.2440!

31 thg 1, 2017

For those who read Tuesday’s report on the GBP you may recall that our desk highlighted the 1.24/1.2440 region (yellow box) as a rather attractive H4 buy zone. It comprised of a H4 AB=CD 161.8% Fib ext., the 1.24 handle, a H4 trendline support taken from the high 1.2432 and boasted additional backing from a daily support area chiseled in at 1.2510-1.2415. Well done to any of our readers who took advantage of this convergence!

Going forward, we can see that price recently made contact with a H4 supply area coming in at 1.2611-1.2589. While the H4 candles are currently seen holding firm below this area, we feel it will not be long before this zone is engulfed and price makes its way up to the H4 mid-way resistance at 1.2650, or even the H4 Quasimodo resistance level at 1.2699. As of now the better area for shorts, at least in our view, is the above noted H4 Quasimodo resistance that fuses beautifully with the 1.27 handle. Not only is it housed within daily supply at 1.2728-1.2657, it’s also sitting only 25 or so pips above the weekly Quasimodo resistance at 1.2673.

Our suggestions: Be patient! Selling at a H4 supply that has no connection to the higher-timeframe structures is not something we’d advise. Should the unit strike the 1.27 region today/this week, this is an area one could possibly look to sell from without the need for additional confirmation as stops can be positioned above the aforementioned daily supply around the 1.2730 mark.

Data points to consider: UK manufacturing PMI at 9.30am. US ADP non-farm employment change at 1.15pm, ISM manufacturing PMI at 3pm followed by the Federal Reserve monetary policy decision at 7pm GMT.