Weekly closing price: 1.3101
Looking at the , it’s clear to see that a strong succession of bids flowed into the market last week, consequently forming a near-full-bodied weekly candle within supply at 1.3120-1.2957. Assuming that the bulls continue to govern direction here, this could lead to a move being seen up to a Quasimodo coming in at 1.3371.
Recent action on the , nevertheless, shows price recently crossed above a at 1.3058-1.2979. Technically speaking, this could potentially stimulate another round of buying this week up to supply drawn from 1.3278-1.3179 (not seen on the screen).
A quick recap of Friday’s trade on the H4 timeframe shows that the GBP/USD received a sharp boost of buying, following lower-than-expected US and retail sales numbers. The move, as you can see, pushed price above multiple tech resistances and ended the week closing marginally above the 1.31 handle.
To our way of seeing things, 1.31 is a key level to keep an eye on today. Should the market reject this number, it could imply that the bears may make an appearance within the current weekly supply. A decisive H4 close above this psychological boundary, nonetheless, would likely suggest that the unit could be heading up to a H4 resistance derived from 1.3172 (not seen on the screen), located seven pips below the daily supply mentioned above at 1.3278-1.3179.
Our suggestions: Keep a close eye on 1.31 today as it could play a decisive role in where this market may be headed today/ this week.
A decisive H4 close above 1.31 followed up with a retest and a H4 bull candle (preferably a full, or near-full-bodied candle) would be enough evidence for us to consider a long, targeting 1.3172.
A rejection of 1.31, however, would likely call for a move back down to the top edge of the recently broken daily at 1.3058/mid-level support at 1.3050. This could be an option should one be able to pin down an entry with a small enough stop to accommodate sufficient risk/reward.
Personally, we prefer looking for longs above 1.31 since risk/reward will likely be much better.
Data points to consider: No high-impacting events on the docket today.
Levels to watch/live orders:
• Buys: Watch for H4 price to print a decisive engulf above 1.31 and then look to trade any retest seen thereafter (waiting for a H4 candle – preferably in the form of a full, or near-full-bodied candle – to form following the retest is advised, stop loss: ideally beyond the candle’s tail).
• Sells: Flat (stop loss: N/A).