Weekly closing price: 1.0621
Following a three-week slide, renewed buying interest came into the market last week from the top edge of a major weekly at 1.0333-1.0502 that’s bolstered by the 2017 yearly opening level at 1.0515. In the event that the bulls continue to push forward this week, the next upside objective in view can be seen at 1.0819/1.0873 (weekly resistance/the 2016 yearly opening base).
Since the 22nd February, the daily candles have been sandwiched between a daily support hurdle coming in at 1.0520 and a daily supply area drawn from 1.0676-1.0608. If this daily supply is violated this week the next level on the horizon is a nearby daily resistance seen at 1.0710. On the other hand, a downside move through the daily support could set that stage for a continuation move south down to a daily pegged at 1.0360.
A quick recap of Friday’s action on the H4 chart shows that the pair ended the day on a positive tone, closing above the H4 resistance extended from the high 1.0714. In spite of Janet Yellen’s recent comments regarding a potential rate hike in March, dollar bulls were clearly not impressed!
Our suggestions: On account of the above notes, we see the following:
• While the H4 candles did indeed close above a H4 resistance, the bulls have to contend with not only the H4 marked with a green circle around the 1.0630ish range, but also the daily supply mentioned above at 1.0676-1.0608!
• On the other side of the coin, the break above the H4 resistance could be viewed as a mark of strength given where weekly price has just bounced from.
Both of the above points are valid, in our opinion. However, trading this market based on either, as you can see, would place you in direct conflict with opposite structure. Therefore, although it may not feel like the right move, sometimes trading flat is the more logical position to take.
Data points to consider: FOMC member Kashkari speaks at 8pm GMT .