What was also brought into play, however, was a daily (see black arrows) 127.2% correction point at 1.3883 and a 38.2% daily Fib support at 1.3849. This, from a technical perspective, helped the pair recover the majority of earlier losses during US trading hours.
The H4 area marked in yellow between 1.40 and a H4 broken Quasimodo line at 1.4025 represents a potential fakeout zone. A huge number of stop-loss orders are typically positioned around large psychological levels. This is why these numbers tend to overshoot at times. The yellow zone highlights where potential stop-loss orders are located.
Potential trading zones:
Although the unit recently responded to a reasonably attractive base of daily support (see above), selling from 1.4025/1.40 is a real possibility. Should H4 price chalk up a selling wick (see H4 chart) that penetrates the yellow H4 fakeout zone and closes below 1.40, this is a strong indication that the bears want to revisit the 1.39 neighborhood. Bolstering this sell is the fact that weekly price shows little support on the horizon until we reach 1.3683.
Data points to consider: UK Halifax HPI m/m at 8.30am; FOMC member Dudley speaks at 1.30pm; FOMC member Williams speaks at 10.20pm GMT .