Kicking this morning’s report off with a look at the weekly timeframe, we can clearly see that price is now within shouting distance of connecting with a support area marked at 0.7849-0.7752. Meanwhile, daily action shows the recently engulfed support at 0.7955 is holding ground as resistance. Provided that the bears continue to defend this line, daily demand at 0.7786-0.7838 is likely going to be the next port of call on this scale (seen plotted within the walls of the noted weekly support area).The story on the H4 timeframe, nevertheless, shows price responded beautifully to H4 demand pegged at 0.7866-0.7850 on Tuesday, but has failed to sustain this momentum beyond the nearby 0.79 handle.
Suggestions: Considering that both weekly and daily price show room to decline further, our team has absolutely no interest in buying from current price or the H4 demand base. The H4 Quasimodo support seen plotted below the current demand at 0.7839, however, is of interest (not seen on the screen). Not only does 0.7839 align nicely with the top edge of daily demand at 0.7838 and nearby the top edge of the weekly support area at 0.7849, we also have the benefit of all the juicy stop-loss orders planted below the current H4 demand. Remember, when a buyer’s stop is triggered it becomes a sell order, which is ideal liquidity to buy!
Given the above, we have set a pending buy order at 0.7839, with a stop placed below the apex of the Quasimodo formation (0.7807) at 0.7805. This equates to a 34-pip stop. As the first take-profit target does not come into view until 0.79, this allows the trader to nearly double his/her initial risk!
Data points to consider: US Core durable goods orders at 1.30pm; US New pending home sales at 3pm; FOMC member Brainard speaks at 7pm GMT+1.
Suggestions: Considering that both weekly and daily price show room to decline further, our team has absolutely no interest in buying from current price or the H4 demand base. The H4 Quasimodo support seen plotted below the current demand at 0.7839, however, is of interest (not seen on the screen). Not only does 0.7839 align nicely with the top edge of daily demand at 0.7838 and nearby the top edge of the weekly support area at 0.7849, we also have the benefit of all the juicy stop-loss orders planted below the current H4 demand. Remember, when a buyer’s stop is triggered it becomes a sell order, which is ideal liquidity to buy!
Given the above, we have set a pending buy order at 0.7839, with a stop placed below the apex of the Quasimodo formation (0.7807) at 0.7805. This equates to a 34-pip stop. As the first take-profit target does not come into view until 0.79, this allows the trader to nearly double his/her initial risk!
Data points to consider: US Core durable goods orders at 1.30pm; US New pending home sales at 3pm; FOMC member Brainard speaks at 7pm GMT+1.
IC Markets is an online forex broker specialized in providing transparent trading solutions to both retail and institutional investors alike. We provide superior execution technology, lower spreads and unrivaled liquidity.