Looking to short from 107.65...
Weekly gain/loss: + 350 pips
Weekly closing price: 106.59
Weekly opening price: 106.88
Weekly view: The aftermath of last week’s US election allowed the recently closed weekly candle to form a reasonably large bullish engulfing formation. Before candlestick enthusiasts get too excited, nonetheless, you may want to take into account that the week ended with price closing within the upper edge of a resistance area coming in at 105.19-107.54.
Daily view: In line with weekly structure, daily price also reveals that the market is currently trading at the underside of a supply zone drawn from 107.90-107.15, bolstered by a nearby AB=CD bearish completion point at 106.86. On the other side of the coin, however, daily price broke above a trendline resistance taken from the high 114.44 on Thursday and responded relatively well on Friday’s retest of this boundary, suggesting further buying may be on the cards.
H4 view: Following a near-retest of the 106 handle on Friday, this morning’s action begun with a 30-pip gap north, which has, as you can see, forced price above the 107 handle into supply carved in at 107.49-107.09. Though this supply looks appealing due to it being positioned within the daily supply mentioned above and also located within the extremes of the aforementioned resistance area, we still have to be prepared for a fakeout above this zone to a nearby resistance level coming in at 107.65!
Direction for the week: From a structural perspective, we consider the pair to be trading in overbought conditions. As a result, this could presage a selloff this week.
Direction for today: We do not see price breaching the H4 resistance mentioned above at 107.65 today, and therefore, believe a selloff is more likely back down to around the 106 region.
Our suggestions: Instead of looking to short the current H4 supply area, we’re more drawn to the H4 resistance at 107.65. The reason is that there’s undoubtedly a truckload of stops sitting just above this supply, and these stops, once filled, become buys which are needed to sell! Therefore, we anticipate a fakeout above the current H4 supply area, with the H4 resistance looking like an ideal area to fake into. Now, we would, dependent on time of day, look to short from here at market. Why? Well, mainly due to the higher-timeframe structure, and the fact that the H4 resistance is also a Quasimodo resistance (see June 2016). Moreover, we can comfortably places stops above the apex of this Quasimodo formation at 107.90.
Weekly closing price: 106.59
Weekly opening price: 106.88
Weekly view: The aftermath of last week’s US election allowed the recently closed weekly candle to form a reasonably large bullish engulfing formation. Before candlestick enthusiasts get too excited, nonetheless, you may want to take into account that the week ended with price closing within the upper edge of a resistance area coming in at 105.19-107.54.
Daily view: In line with weekly structure, daily price also reveals that the market is currently trading at the underside of a supply zone drawn from 107.90-107.15, bolstered by a nearby AB=CD bearish completion point at 106.86. On the other side of the coin, however, daily price broke above a trendline resistance taken from the high 114.44 on Thursday and responded relatively well on Friday’s retest of this boundary, suggesting further buying may be on the cards.
H4 view: Following a near-retest of the 106 handle on Friday, this morning’s action begun with a 30-pip gap north, which has, as you can see, forced price above the 107 handle into supply carved in at 107.49-107.09. Though this supply looks appealing due to it being positioned within the daily supply mentioned above and also located within the extremes of the aforementioned resistance area, we still have to be prepared for a fakeout above this zone to a nearby resistance level coming in at 107.65!
Direction for the week: From a structural perspective, we consider the pair to be trading in overbought conditions. As a result, this could presage a selloff this week.
Direction for today: We do not see price breaching the H4 resistance mentioned above at 107.65 today, and therefore, believe a selloff is more likely back down to around the 106 region.
Our suggestions: Instead of looking to short the current H4 supply area, we’re more drawn to the H4 resistance at 107.65. The reason is that there’s undoubtedly a truckload of stops sitting just above this supply, and these stops, once filled, become buys which are needed to sell! Therefore, we anticipate a fakeout above the current H4 supply area, with the H4 resistance looking like an ideal area to fake into. Now, we would, dependent on time of day, look to short from here at market. Why? Well, mainly due to the higher-timeframe structure, and the fact that the H4 resistance is also a Quasimodo resistance (see June 2016). Moreover, we can comfortably places stops above the apex of this Quasimodo formation at 107.90.
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