Still looking for shorts at 1.0971/1.0950

2017年5月2日

The EUR/USD, as you can see, remains somewhat muted as the major continues to trade within a H4 consolidation fixed between 1.0816/1.0950. Of particular interest here, however, is the long wick seen formed on the 28th April at 1.0947 (green arrow). This candle’s extreme has potentially consumed a large amount of offers within the current range, which could see price approach the upper edge of this box sometime today.

Now, 1.0950 on its own would not be a high-probability location to short from, as momentum has been firmly positioned to the upside since early April. Nevertheless, when coupled with a daily 61.8% Fib resistance at 1.0932 (green line), a nearby daily resistance pegged at 1.0971 and a weekly 127.2% Fib extension at 1.0954 (taken from the lows 1.0340), the technical story shifts in favor of the bears!

Our suggestions: Watch for H4 price to form a reasonably sized bearish candle between 1.0971/1.0950 (preferably a full-bodied candle). Should this come to fruition, then not only is a move back into the H4 consolidation possible, but a trade short on the back of this is as well.

Data points to consider: US ADP non-farm employment change at 1.15pm, ISM non-manufacturing PMI at 3pm and the FOMC’s monetary policy decision at 7pm GMT+1.